The Republican Class War

A generation ago, Democrats lost five of six Presidential elections; in 1992, Bill Clinton, calling himself a New Democrat, ended the streak. Clinton didn’t repudiate the whole Democratic platform—government activism on behalf of ordinary Americans remained the Party’s core idea—but he adopted positions on issues like crime and welfare that were more closely aligned with the views of the majority, including some rank-and-file Democrats. The message, Wehner said, was as much symbolic as substantive: “ ‘We’re not a radical party; we’ve sanded off our rougher edges, and you can trust me.’ ”

.. The essays don’t upend Republican orthodoxy. They argue that government should intervene on behalf of poor and middle-income Americans, but in ways that apply market principles to public policy, taking power away from Washington and giving individuals more options. Some proposals are familiar: school choice, health-care savings accounts. Others are more daring—for example, having college education underwritten by private investors, then repaid over the next decade as a predetermined percentage of graduates’ earnings. A few ideas, such as a wage subsidy that would increase the pay of workers making less than forty thousand dollars a year, building on the Earned Income Tax Credit, could easily garner bipartisan support.

.. The reformocon project shows how extreme mainstream conservatism has become in its opposition to anything involving the state. The reformocons court right-wing censure simply by acknowledging that the middle class is under pressure, and that government has a role to play beyond cutting taxes.

.. To the reformocons’ dismay, Trump has commandeered their target audience and tainted their high-minded proposals.

.. More than anything, Trump supporters are defined by class: non-college-educated whites favor him at twice the rate of those with college degrees. Trump is attracting the very blue-collar Americans whom the reformocons were aiming to bind to the Republican Party.

.. Last year, a Gallup poll found that forty-five per cent of Republicans think that the rich should pay more in taxes. Another poll, by the Pew Research Center, showed that more Republicans favor increased spending on Social Security, Medicare, education, and infrastructure than favor cutting those programs. Although government activism is anathema to conservative donors and Grover Norquist, it’s fine with a lot of Republicans making less than fifty thousand dollars a year.

.. Trump presents himself as a capitalist boss who won’t let capitalism tear apart the (white) social fabric.

.. The outlook of the Republican grass roots, and of many Party leaders, is what Richard Hofstadter, writing toward the end of the McCarthy era, called “pseudo-conservative,” because “its exponents, although they believe themselves to be conservatives and usually employ the rhetoric of conservatism, show signs of a serious and restless dissatisfaction with American life, traditions, and institutions.”

.. [Kasich] offered no policy proposals to help the middle class, besides balancing the federal budget and deregulating business.

.. A tall, athletic-looking man asked Kasich, “Doesn’t cleaning the system out start with changing our campaign-finance system, starting with overturning Citizens United?” He was referring to the 2010 Supreme Court ruling permitting unlimited campaign spending by independent groups.

Kasich’s tone was dismissive. “So you change the campaign-finance laws,” he said. “How will it work? Probably not all that great. ’Cause what it gets down to is what’s in your heart.” He went on, “I got bigger fish to fry.” He mentioned the budget, entitlements, defense spending. “These are really big things. You got to have priorities.”

.. “My ideal candidate would be somebody who has a lot of Donald Trump’s views but is more polished,” he said. The best alternative, he felt, was Rubio. When I pointed out that Rubio was a Washington insider, Lynch sighed. “That’s the pickle I’m in, and a lot of people are in,” he said. “No matter who gets elected, it’s just going to be more of the same.

.. In other words, the way to think about inequality is by looking down, not up. It’s not the wealth amassed at the top but, rather, the lack of “skills, values, and habits” at the bottom that accounts for the widening income gap. Oddly, Wehner’s essay barely mentions the economic struggles of the middle class. A close look at the three middle quintiles of income, where Americans with an education, a job, and a spouse can be found treading water or sinking, would have forced him to reconsider the notion that a lack of “social capital”—as opposed to just capital—explains the entire problem.

.. What kind of “national community” built on “mutual obligation” is possible when Americans have so little shared experience?

.. It’s no accident that we’re in the era of Citizens United. Such rulings give ordinary Americans the strong suspicion that the game is rigged. Democratic institutions no longer feel legitimate when they continue to produce blatantly unfair outcomes; it’s one of those insights that only an élite could miss.

.. The reformocons like to quote Lincoln, but not this memorable sentence: “Republicans are for both the man and the dollar, but in case of conflict the man before the dollar.”

.. Trump is as popular in Ohio as anywhere else,” John C. Green, a political scientist at the University of Akron, told me in September, in his office. The Presidential campaign felt far away—Ohio’s primary isn’t until next March—but the state remains key to the general election. “Part of it is that Trump’s an emblem of success, and the other part of it is he taps people’s anger,” Green said. “It’s not the same anger as a few years ago, when it was ‘Where are the jobs?’ Now it’s ‘Where’s our share of the American dream?’ ” Green, who does polling research on Ohio and American politics, went on, “A lot of white working-class votes are up for grabs in this election.

.. According to Policy Matters Ohio, since 2013 Kasich’s policies, including a higher sales tax and cigarette tax, have raised average annual taxes on the state’s poorest fifth by seventeen dollars, given middle-income people a ninety-four-dollar cut, and returned seventeen thousand dollars to members of the one per cent. “We’ve engineered a tax shift to lower- and middle-income Ohioans,” Schiller said. “And we’ve reduced over-all tax revenue.”

.. As long as Republicans cling to the warped logic of trickle-down economics, their efforts to help middle-class Americans will be largely rhetorical.

.. Baum found Trump’s insulting manner refreshing, calling it “a mirror of the way they treat us.”

.. Levin’s description of American life sounds appealing, but it does not reflect the reality of the steelworkers’ lives. The “massive, distant system of material provision” is their company, which is far more top-down than any federal bureaucracy. Nothing happens face to face; immediately felt needs go ignored; families don’t matter. There is no “common life” except for the workers’ desperate effort to stick together as they look ahead to weeks or months without pay—or, perhaps, a future without a job. Global competition is making these workers disposable, and so they are turning for insight and inspiration to Sanders, or Piketty, or Trump.

What Was Gary Becker’s Biggest Mistake?

The econometrician Henri Theil once said “models are to be used but not to be believed.” I use the rational actor model for thinking about marginal changes but Gary Becker really believed the model. Once, at a dinner with Becker, I remarked that extreme punishment could lead to so much poverty and hatred that it could create blowback. Becker was having none of it. For every example that I raised of blowback, he responded with a demand for yet more punishment. We got into a heated argument. Jim Buchanan and Bryan Caplan approached from the other end of the table and joined in. It was a memorable evening

Blanchard: Looking Forward, Looking Back

Olivier Blanchard will step down as Economic Counsellor and Director of the IMF’s Research Department at the end of September.

He will join the Peterson Institute for International Economics in October as the first C. Fred Bergsten senior fellow, a post named for the founder of the influential 35-year-old, Washington-based think tank.

When French-born Blanchard, a former chairman of the economics department at the Massachusetts Institute of Technology, joined the IMF on September 1, 2008

.. Finally, there is a clear swing of the pendulum away from markets towards government intervention, be it macro prudential tools, capital controls, etc. Most macroeconomists are now solidly in a second best world. But this shift is happening with a twist—that is, with much skepticism about the efficiency of government intervention.

.. There is a good chance that we have entered a period of low productivity growth. There is a chance that we have entered a period of structurally weak demand, which will require very low interest rates. And low growth combined with increasing inequality, is not only unacceptable morally, but extremely dangerous politically.

 

The V.C.s of B.C.

Economists, creating models of trade, have faced a challenge, because their data have derived exclusively from the modern world. Are their models universal or merely reflections of our time? It’s a crucial question, because many in our country would like to change our trading system to protect American jobs and to improve working conditions here and abroad. The archives of Kanesh have proved to be the greatest single source of information about trade from an entirely premodern milieu.

.. Over the 30 years covered by the archive, we see an economy built on trade in actual goods — silver, tin, textiles — transform into an economy built on financial speculation, fueling a bubble that then pops. After the financial collapse, there is a period of incessant lawsuits, as a central government in Assur desperately tries to come up with new regulations and ways of holding wrongdoers accountable (though there never seems to be agreement on who the wrongdoers are, exactly). The entire trading system enters a deep recession lasting more than a decade. The traders eventually adopt simpler, more stringent rules, and trade grows again.

.. Jan Tinbergen — who would later share the first Nobel in economic science — noted something curious: Trade within and between countries followed a mathematical formula. He called it the Gravity Model, sort of an E=mc2 for global business. It comes with an imposing formula: Fij = G(Mi x Mj)/Dij. Which, simplified, means that trade between two markets will equal the size of the two markets multiplied together and then divided by their distance. (The model gets its name from its mathematical similarity to the equation in physics that describes gravitational pull.)