But Trump’s theatrics were also very convenient because they disguised the fact that he cannot now, or ever, deliver on his signature promise to create a “great” infrastructure program. This is why Trump “infrastructure weeks” have become a standing joke in Washington. LaTourette was right: The Republican Party is no longer interested in spending public money to solve big problems if doing so gets in the way of cutting taxes.
LaTourette explained this in his rough-and-ready way back in 2011 when he called the 2010 tea party class of Republicans “knuckledraggers that came in in the last election that hate taxes.”
One of those newcomers was Mick Mulvaney, now Trump’s acting chief of staff and budget director. From the moment Trump, Pelosi and Schumer announced their convergence on a $2 trillion infrastructure plan last month, Mulvaney began sabotaging it. “Is it difficult to pass any infrastructure bill in this environment, let alone a $2 trillion one, in this environment? Absolutely,” Mulvaney said.
He was far from alone because the entire Republican leadership in Congress is now part of the Knuckledraggers Caucus. Senate Majority Leader Mitch McConnell quickly signaled that he had absolutely no interest in a big infrastructure plan if it required rolling back any part of the GOP’s 2017 corporate tax cut.
Democrats argue that because business is clamoring for infrastructure, it would make sense to ask business to foot part of the bill. They have suggested raising the corporate tax rate to 25 percent from the 21 percent enshrined in the 2017 law and pulling back on some of its other provisions.
No way, say the Republicans. A “nonstarter,” declared McConnell. Faced with the choice of bridges collapsing in a heap or reining in the tax giveaways, the bridges don’t have much of a chance.
Note that the meeting Trump sabotaged was about how to finance the plan. He had no way of coming up with anything constructive because, for all of his bravado, he is totally under the thumb of Congress’s conservative ideologues. His tantrum was part of the coverup no one is talking about: The emperor has no money.
This fact underscores a widespread misunderstanding about our politics. “Normal” Republicans are regularly described as privately horrified with Trump. Trump is said to have engaged in “a hostile takeover” of the GOP.
In fact, it’s Trump who has been taken over. He campaigned as a different kind of Republican, and his infrastructure promise was a major component of his antiideological image. But on all the things the ideologues and right-wing business interests care about —
Trump caves in.
We know the president’s boast that he “could stand in the middle of Fifth Avenue and shoot somebody and I wouldn’t lose any votes.” Perhaps Republicans in Congress wouldn’t go that far. Otherwise, they’ll keep standing with him as long as he prostrates himself before their tax-cutting god, even if this means showing he is too weak and powerless to fix the roads.
We can save our broken economic system from itself.
Despite the lowest unemployment rates since the late 1960s, the American economy is failing its citizens. Some 90 percent have seen their incomes stagnate or decline in the past 30 years. This is not surprising, given that the United States has the highest level of inequality among the advanced countries and one of the lowest levels of opportunity — with the fortunes of young Americans more dependent on the income and education of their parents than elsewhere.
But things don’t have to be that way. There is an alternative: progressive capitalism. Progressive capitalism is not an oxymoron; we can indeed channel the power of the market to serve society.
In the 1980s, Ronald Reagan’s regulatory “reforms,” which reduced the ability of government to curb the excesses of the market, were sold as great energizers of the economy. But just the opposite happened: Growth slowed, and weirder still, this happened in the innovation capital of the world.
The sugar rush produced by President Trump’s largess to corporations in the 2017 tax law didn’t deal with any of these long-run problems, and is already fading. Growth is expected to be a little under 2 percent next year.
This is where we’ve descended to, but not where we have to stay. A progressive capitalism based on an understanding of what gives rise to growth and societal well-being gives us a way out of this quagmire and a way up for our living standards.
Standards of living began to improve in the late 18th century for two reasons:
- the development of science (we learned how to learn about nature and used that knowledge to increase productivity and longevity) and
- developments in social organization (as a society, we learned how to work together, through institutions like the rule of law, and democracies with checks and balances).
Key to both were systems of assessing and verifying the truth. The real and long-lasting danger of the Trump presidency is the risk it poses to these pillars of our economy and society, its attack on the very idea of knowledge and expertise, and its hostility to institutions that help us discover and assess the truth.
There is a broader social compact that allows a society to work and prosper together, and that, too, has been fraying. America created the first truly middle-class society; now, a middle-class life is increasingly out of reach for its citizens.
America arrived at this sorry state of affairs because we forgot that the true source of the wealth of a nation is the creativity and innovation of its people. One can get rich either by adding to the nation’s economic pie or by grabbing a larger share of the pie by exploiting others — abusing, for instance, market power or informational advantages. We confused the hard work of wealth creation with wealth-grabbing (or, as economists call it, rent-seeking), and too many of our talented young people followed the siren call of getting rich quickly.
Beginning with the Reagan era, economic policy played a key role in this dystopia: Just as forces of globalization and technological change were contributing to growing inequality, we adopted policies that worsened societal inequities. Even as economic theories like information economics (dealing with the ever-present situation where information is imperfect), behavioral economics and game theory arose to explain why markets on their own are often not efficient, fair, stable or seemingly rational, we relied more on markets and scaled back social protections.
We are now in a vicious cycle: Greater economic inequality is leading, in our money-driven political system, to more political inequality, with weaker rules and deregulation causing still more economic inequality.
If we don’t change course matters will likely grow worse, as machines (artificial intelligence and robots) replace an increasing fraction of routine labor, including many of the jobs of the several million Americans making their living by driving.
The prescription follows from the diagnosis: It begins by recognizing the vital role that the state plays in making markets serve society. We need regulations that ensure strong competition without abusive exploitation, realigning the relationship between corporations and the workers they employ and the customers they are supposed to serve. We must be as resolute in combating market power as the corporate sector is in increasing it.
If we had curbed exploitation in all of its forms and encouraged wealth creation, we would have had a more dynamic economy with less inequality. We might have curbed the opioid crisis and avoided the 2008 financial crisis. If we had done more to blunt the power of oligopolies and strengthen the power of workers, and if we had held our banks accountable, the sense of powerlessness might not be so pervasive and Americans might have greater trust in our institutions.
The neoliberal fantasy that unfettered markets will deliver prosperity to everyone should be put to rest. It is as fatally flawed as the notion after the fall of the Iron Curtain that we were seeing “the end of history” and that we would all soon be liberal democracies with capitalist economies.
Most important, our exploitive capitalism has shaped who we are as individuals and as a society. The rampant dishonesty we’ve seen from Wells Fargo and Volkswagen or from members of the Sackler family as they promoted drugs they knew were addictive — this is what is to be expected in a society that lauds the pursuit of profits as leading, to quote Adam Smith, “as if by an invisible hand,” to the well-being of society, with no regard to whether those profits derive from exploitation or wealth creation.
Smith’s breakthrough came in 1996, with the publication of his article “Faulty Assumptions and Undemocratic Consequences of Campaign Finance Reform” in the Yale Law Journal.
In “Faulty Assumptions”, Smith laid out a case against campaign finance regulation, arguing that efforts to regulate money in politics had been based on a series of incorrect beliefs about the effects of money in politics, and that as a result reform efforts had failed to accomplish their objectives and had made many of the problems of money in politics worse. “Faulty Assumptions,” and later articles by Smith, have been cited in numerous recent Supreme Court decisions striking down campaign finance laws on Constitutional grounds, including Citizens United v. Federal Election Commission. In 2010 The New York Times called Smith the “intellectual powerhouse” behind the movement to deregulate campaign finance. The importance of “Faulty Assumptions” lay in its blending of existing political science research with legal and constitutional theory. Before “Faulty Assumptions”, most legal scholarship on campaign finance had followed a narrative that assumed the corruptive and anti-egalitarian effects of large campaign contributions and spending, and had then focused on the creating a legal regime to control those effects and justify regulation against First Amendment claims recognized by the Supreme Court in Buckley v. Valeo. At the same time, these articles largely ignored a growing literature in political science based on empirical studies of campaign spending and regulatory regimes. Smith’s contribution was to bring these two arms of scholarship together, blending the growing body of empirical data to the constitutional and legal principles laid out elsewhere. The result was to challenge the very foundation of campaign finance reform in both politics and constitutional law. Smith’s analysis forced proponents of reform to rethink many basic assumptions, or at least to justify them against his critique.
.. Smith also wrote Unfree Speech: The Folly of Campaign Finance Reform, a book published by the Princeton University Press in 2001. By the time Unfree Speech was published, both Smith and his campaign finance scholarship had become something of a Rorschach test for attitudes about campaign finance. The book met with near universal praise among opponents of regulation, such as columnist George Will, who called it “the Year’s most important book on governance,” and condemnation from supporters of regulation, with journalist Eliza Newlin Carney lambasting it as “facile and boggling.” Scholars, including the British political scientist Michael Pinto-Duschinsky were more balanced and generally complimentary, but by the time of publication Smith had been appointed to the Federal Election Commission and the book was largely reviewed as a political tract, rather than as the scholarly manuscript Smith presumably intended.
.. The Brennan Center for Justice, a harsh critic of Smith’s work, nevertheless recognized him as “the most sought after witness” to make the case for deregulation of campaign finance before congressional committees.
.. Because of his contrarian, deregulatory views on campaign finance, there was a strong objection to his nomination from reform advocates.
The libertarian magazine Reason noted that virtually all reform advocates “agreed that he was the wrong person for the job”. His nomination, however, received support from supporters of deregulation of campaign finance, such as the Cato Institute.
.. After leaving the FEC, Smith returned to teaching at Capital University and founded a non-profit organization, the Center for Competitive Politics to promote deregulation of campaign finance.
That crashing sound you heard in world markets last week wasn’t just a correction. It was the sound of the end of an age.
During the long era of relatively stable international relations that succeeded the Cold War, markets enjoyed an environment uniquely conducive to economic growth.
.. The results were extraordinary. Between 1990 and 2017, world-wide gross domestic product rose from $23.4 trillion to $80.1 trillion, the value of world trade grew even faster, more than a billion people escaped poverty, and infant-mortality rates decreased by more than 50%. The number of people with telephone service grew roughly 10-fold.
This hiatus from history was, by most measures of human flourishing, a glorious era. Now it has come to an end, or at least a pause, and the world is beginning to see what that means.
.. the basic elements of economic globalization appeared firmly in place.
- Russia, the most obvious challenger to the geopolitical order, was an insignificant and diminishing player economically.
- And China, notwithstanding its rapid economic growth and its anxiety about American military power, was unlikely to challenge the economic basis of its own success. Geopolitics might have been back, but that wasn’t an issue for markets.
That complacency was misplaced. The return of geopolitics means the basic framework for economic policy has changed. In periods of great-power rivalry, national leaders must often put geopolitical goals ahead of economic ones. Bismarck’s Germany could have saved money buying armaments from Britain, but building a domestic arms industry was worth the cost. If the U.S. is in a serious strategic competition with China, an American president might well be willing to sacrifice some economic growth to banish China from important supply chains.
,, by invoking “national security,” the Trump administration has found a legal basis, with roots in the Cold War and even earlier, to assert sweeping powers over the nation’s commerce. It has upended a generation of U.S. trade policy in a dramatically short period of time.
.. The new era of geopolitics is unlikely to be an era of small government.
.. The Trump administration is
- reversing some of the regulatory excesses of the Obama era, and
- the president’s judicial appointees are prepared to rein in the administrative state.
.. A recalibration of the U.S.-China relationship was likely inevitable as the world’s oldest civilization became an economic superpower.
Hillary Clinton, who as secretary of state clashed with Mr. Obama over the need for a tougher approach to China, would not be a popular figure in Beijing if she had won the 2016 election.