Monday, January 21, 2008

What Impressed Me This Week: Krugman's Conscience

This week I finally deliver on my promise to review Paul Krugman's new book The Conscience of a Liberal. If you don't like mine, DHinMI also reviewed the book on DailyKos.

Paul Krugman's New Book
In a readable, 273-page book, Princeton economist and New York Times columnist Paul Krugman retells the political/economic history of the United States from the Gilded Age until today. He does it to make a point: The amount of economic inequality in America is largely a political decision, not a result of impersonal economic forces. America became a middle-class society fairly quickly in response to the New Deal, and inequality has grown back to Gilded Age proportions because of the conservative economic policies that have been dominant since Ronald Reagan.

It's easy to imagine two ways to make this argument: In a 900-page tome dense with economic jargon and mathematics, or in a breezy polemic that sounds plausible but has no connection to rigorous thought. Krugman does neither. I wish I had a comparison that would be meaningful to a wider group of people, but what Conscience reminds me of most is the kind of discussion that used to happen every spring in Bill James' Baseball Abstract. James revolutionized the way we look at baseball -- the recent Red Sox teams were largely built on his principles -- by testing baseball's folklore against its statistics. It turned out that a lot of the stuff that "everybody knows" was wrong. And instead of inspiring a wonky priesthood that could feel superior to the game, James made those ideas accessible to enough people to change the way baseball is actually played. (The reason you don't see as many sacrifice bunts as you used to, for example, is that in most situations a guy on second with one out is actually a little less likely to score than a guy on first with nobody out. Who knew?)

Today, our national conversation about economics is full of folklore: A rising tide lifts all boats. Tax cuts pay for themselves by encouraging growth. Free trade creates more jobs than it destroys. Regulation gums up the natural efficiency of the market. Government spending is wasteful. The current stress on the middle class is nobody's fault; it's due to impersonal forces like globalization and technology.

Is any of it true? It's hard for the ordinary person to say. Those statements sound plausible. There might be a universe that works that way. But does ours? If you challenge this received wisdom, you're met with just-so stories about clever entrepreneurs who create new industries or self-important bureaucrats who write rules no one can fulfill. The stories may even be true, but maybe there are other stories that would make the opposite point, if only you knew them.

Meanwhile, there's academic economics, full of complex statistics and mathematical models you can't manage without a computer. Does any of that analysis say anything that voters can understand and use? (It turns out that occasionally it does: Tax cuts don't pay for themselves. This has been modeled five ways from Sunday, and it just doesn't work. It's no accident that both the Reagan and the Bush tax cuts led to huge deficits, while the Clinton tax increase created a surplus.)

Paul Krugman is bridging this gap.

The story without the numbers. The overall story Krugman tells can be understood without any statistics: When America was founded, it (like all other western countries at the time) had a great deal of inequality. For the next century and a half, economic growth benefited the social classes more-or-less equally, so that while America as a whole got richer, the gap between rich and poor stayed roughly the same and the middle class remained small. This persisted right up to the Great Depression, when the working class got desperate enough to throw its political weight behind a truly radical program, the New Deal. The New Deal created the safety net of social security and unemployment insurance; established a minimum wage; made government the ally rather than the enemy of unions; used wartime economic controls to raise the pay of workers in general and especially the workers at the bottom; and raised taxes on the wealthy.

The result was something Krugman calls the Great Compression. Between the 1930s and the 1970s, inequality in America shrunk drastically. Median income increased spectacularly while the rich actually got poorer. Factory workers (like my Dad) could buy houses and send their children to college. America became a middle-class-dominated society.

Politically, this went hand-in-hand with a decrease in partisanship. From Eisenhower to Nixon, Republicans stopped trying to roll back the New Deal. Truman's Cold War foreign policy was carried forward by both parties, until it ultimately resulted in victory over the Soviet Union during the administration of Bush the First. While the gap between the parties didn't go away, there were liberal Republicans and conservative Democrats. You couldn't guess how a congressman would vote just by looking at the R or D after his name.

The snake in this Garden of Eden is what Krugman calls "movement conservatism." Starting with Goldwater, movement conservatives rejected the bipartisan consensus and re-instated the project of undoing the New Deal. First they took over the Republican Party, and then the U. S. government. Taxes on the rich were slashed and government once again became the enemy of unions. Inflation was allowed to eat away the value of the minimum wage. Policies across the board were directed towards making the rich richer.

It worked. Today, inequality is back to Gilded Age levels and we are in what Krugman calls the Second Gilded Age.

Why? One interesting question is why this worked in either direction. Krugman provides two very insightful observations: First, the working class has an inborn fear of change, even change that promises to improve its lot. If you're just barely hanging on, you put more energy into worrying about things getting worse than into hoping for things to get better. So even though there have always been more poor voters than rich ones, prior to the Depression the poor were skeptical of progressive innovations like the minimum wage. If the bosses told you that a minimum wage would get you all fired, you believed them. But after World War II, the deed was done and a new status quo ruled, so the working class supported it.

Second, in five words Krugman sums up the political shift from Lyndon Johnson to Newt Gingrich: Southern whites started voting Republican. He's got the numbers to back that statement up, and it's pretty compelling. In what is probably the book's most controversial point, he sums up the reason for that change in one word: race.

As Krugman tells the story, southern whites had been Democrats since the Civil War, but in particular they signed on to the New Deal because they were poor compared to the rest of the country. The South benefited tremendously from New Deal spending, and comparatively few southerners made enough money to give them a serious tax headache. But the southern congressmen balked when Truman tried to complete the New Deal by instituting national health insurance, largely out of fear that they'd have to integrate their hospitals. Lyndon Johnson was right when he speculated, after passing the Voting Rights Act, that he had given the South to the Republicans for a generation.

I think Krugman oversimplifies here: southern whites differ from northern whites in more than just their racial views. (The difference in religious heritage -- New England Congregationalists and midwestern Lutherans versus Southern Baptists -- also plays a role.) But this much is inarguable: The conservative coalition relies on working-class whites voting against their economic interests for social or moral reasons. A lot of people who need government help to pay for health care will vote against that help if it means that their tiny pile of tax dollars might pay for somebody else's abortion.

Quantitative reasoning. What I've told you so far is nothing more than an alternative just-so story. It's plausible. If you're already a liberal, you'll buy it just because it supports your previously-established beliefs. But what if you're not? That's a big part of what's wrong with politics today: Our political discourse is a bunch of competing monologues rather than a conversation. Liberals tell stories about homeless veterans and kids who need liver transplants. Conservatives tell stories about small businesses being taxed or regulated out of existence. How do you pull it all together?

That's what numbers are for. I can tell a story where we bunted the runner over to second base and the next batter singled him in, or I can tell a story where somebody drew a walk instead of sacrificing and we went on to have a big inning. Both stories are true, but which one points us in the right direction? There's a correct answer to that question, but you need statistics to figure it out.

Krugman is brilliant at finding the right statistics, walking an ordinary person through an economic analysis, and sending you off to chase a reference at just the right point (the point at which most people are ready to give up anyway). On page 218, for example, is a table comparing the American health care system to Canada, France, Germany, and Britain. There are two columns of numbers: spending per capita and life expectancy. The United States spent $6102 per person on health care in 2004, while none of other countries spent more than $3165. The US life expectancy was 77.5 years, while none of the other countries had less than 78.5. (Numbers come from the World Health Organization.)

How hard is that to grasp? We spend almost twice as much money and we don't live as long. You can tell plenty of true stories about Americans whose lives were saved by state-of-the-art treatment or of foreigners who died, but statements like "America has the best health care system in the world" are simply false.

OK, but even then you have competing stories about why. Maybe the explanation is that Americans choose to live a less healthy lifestyle. We do, but that only accounts for about $100 of the $3000 cost difference. Maybe we're just hypochondriacs and waste our doctors' time. Nope, Americans go to the doctor about as often as people in the other countries. Maybe it's all our frivolous malpractice suits and the extra tests doctors have to run to protect themselves. It could be, but it isn't. The difference comes down to this: The public healthcare system in other advanced countries is just more efficient than the public/private hybrid we have in this country. We'd be much better off if we adopted, say, the French system -- which the W.H.O. rates #1.

Then you run into the horror stories about people in other countries who wait in long lines to get care. Are some of them true? Yes. Are they typical? No -- look at the numbers. Americans don't get their problems dealt with any more promptly than the French or the Germans.

Good, understandable quantitative reasoning is what sets this book apart from books by other progressive authors. The reality of growing inequality, when it happened, whether it preceded or followed political change -- Krugman acknowledges other plausible explanations and shows why he rejects them.

Dissecting the conservative movement. Krugman explains very clearly something I've been puzzled by for years: Why do Republican congressmen stay in line when the Republican leadership chooses some unpopular course?

The answer is that conservatives have built an institutional structure that turns conservatism into a career rather than a philosophy. If you're loyal, you'll be taken care of for life -- no matter what the voters say.
Yes, Virginia, there is a vast right-wing conspiracy. That is, there is an interlocking set of institutions ultimately answering to a small group of people that collectively reward loyalists and punish dissenters
Krugman contrasts two Republican senators defeated in 2006: loyal conservative Rick Santorum, whose landslide defeat was cushioned by immediately landing a cushy job as director of the "America's Enemies" project at the conservative Ethics and Public Policy Center, and maverick Lincoln Chafee, whose loss was in large part engineered by a well-funded right-wing primary challenge, and who managed to find a one-year teaching position at Brown. Politicians get the message: It's better to stick with the party leadership than to represent your constituents.

An interesting tangent is to point out that the incompetence of the Bush administration isn't a coincidence. Loyalty-over-competence is a generic trait of the conservative movement. Mitt Romney is a much smarter and harder-working person than George Bush. But if he's elected he'll be appointing the same collection of ideologues whose main qualification is their loyalty. Brownies will continue to do a heckuva job.

The take-home message. The shrinking of the middle class was a political decision, not some unfortunate side-effect of impersonal market forces. We could fix it by reversing that political decision: make healthcare coverage universal, tax the rich, raise the minimum wage, and tilt the playing field back in the direction of unions.

This Week in the Huckabee Campaign
I'm not making this up. On MSNBC's Morning Joe show, Mike Huckabee told about frying squirrels in a popcorn popper back in his student days. And that led to this photoshopped image by DailyKos humorist Dood Abides.

I wish I were making this up: Huckabee advisor Jim Pinkerton thinks we should put a cop in front of every mosque in America. Or this quote from the candidate himself:
I believe it's a lot easier to change the Constitution than it would be to change the word of the living God. And that's what we need to do -- to amend the Constitution so it's in God's standards rather than try to change God's standards so it lines up with some contemporary view.
In case you haven't received a call from a Huckabee push poll, here's what they're like.

And finally, people are starting to go back and read Huckabee's writings and connect them to the Christian Dominionist movement. His 1997 book Character is the Issue contains this:
Ours will either be a worldview with humans at the center or with God at the center. Standards of right and wrong are either what we establish as human beings (standards which can be changed to suit us), or they are what God has set in motion since the creation of the world. … The winning worldview will dominate public policy, the laws we make, and every other detail of our existence.
Short Notes
If you've been wondering what's really behind all that crazy behavior from Britney Spears, Kung Fu Monkey has it all figured out: It's a spy-who-came-in-from-the-cold operation.

A few weeks ago I told you about the Washington Post spreading baseless rumors about Obama being a Muslim. Well, this week the Post's Richard Cohen wrote a column drawing some tenuous connection between Obama and Louis Farrakhan. It was roundly denounced as an attempt to scare Jewish voters away from Obama. The best debunking I found came from novelist Michael Chabon.

Steve Emerson, who Sean Hannity introduces as a "terrorism expert", tells the Fox News audience about a conspiracy of jihadists within the Pentagon. There are only so many ways to go paranoid, so the crazies tend to go into re-runs. Can't you just hear Joe McCarthy talking about Communists in the State Department?

Al Franken's former teacher wanted to help with his campaign for the Senate seat in Minnesota, so he had her make a campaign ad for him.

The Asia Times isn't buying the Pentagon's account of last week's incident in the Persian Gulf.

Glenn Greenwald keeps us up to date on the FISA bill. Reports of the death of telecom immunity were greatly exaggerated. More and more, Harry Reid is turning into the villain of this story.


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