If Elizabeth Warren really wants to unrig the system, she should focus on the Dream Hoarders

Odds are that you have not been following the recent libertarian dust-up over the merits of an Elizabeth Warren presidency. To give a brief recap: The main contenders were Will Wilkinson and Jerry Taylor of the “liberaltarian” Niskanen Center, who have been Warren-friendly to varying degrees; their opponents were colleague Samuel Hammond, along with Tyler Cowen of the more traditionally libertarian Mercatus Center, who touched off the whole debate with a withering critique of Warren’s policies.

A point-by-point exploration of their arguments would exceed the space allotted for this column by several thousand inches. But I think one can sum up the libertarian approach to Warren with a single question: How big a problem do you think billionaires, and the mega-successful corporations they helm, pose to the average American? Actually, come to think of it, I think that’s about how you’d sum up the question of Warren from any angle.

Which is why this debate ultimately matters to a lot more people than just some cranky libertarians: It speaks directly to a whole lot of young people who see that the economy doesn’t work for them the way it did for their parents and grandparents, and therefore conclude that somewhere along the way, the people it is working for — the barons of finance, the giants of Silicon Valley — must have rigged the system in their favor.

To be fair, they’re not entirely wrong. As Adam Smith once wrote, “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.” Bankers and tech executives very much included. So I find myself nodding in agreement with Wilkinson — and, by extension, with the progressive base of the Democratic Party — when he says: “Warren’s general diagnosis of the problem — it’s a rigged system of anticompetitive rent-seeking enabled by insufficiently democratic and representative political institutions — is broadly similar to my own.”

Yet they’re not entirely right, either. Are big corporations, or billionaires, or banks, or tech giants, or health insurers and pharmaceutical firms — to name some of Warren’s favorite targets — really the reason that young people are struggling

  • with enormous student loans? Are they the reason that millennial homeownership lags that of their parents? Are they the
  • reason that recent college graduates are more likely than their elders to be underemployed? Have they
  • driven the cost of health insurance to its current stratospheric levels?

Sure, Warren may be eager to sic her Consumer Financial Protection Bureau on your mortgage lender if you fall afoul of some obscure clause, but that’s not the problem for most Americans. They’re much more likely to struggle with finding affordable housing in prosperous cities. In fairness, Warren does have a plan to ease the zoning regulations that cause the shortage — but for some reason she rarely talks about it on the campaign trail, possibly because it’s constitutionally dubious, but more likely because it would alienate her affluent suburban base.

Similarly, Warren is eager to forgive student loans — a $1.6 trillion transfer to some of the most affluent members of society — but not to attack degree creep, which has walled off most of the best jobs for those who hold a bachelor of arts while enriching a lot of colleges. She targets insurers and drugmakers, but not the hospitals and medical workers who drive most of our health-care costs.

Too many of her proposals are like this; they focus on corporate villains or billionaires while ignoring the much broader class of people that Richard Reeves of the Brookings Institution dubbed the “Dream Hoardersthe well-educated upper-middle-class people who are desperate to pass their privilege onto their kids, and are unhappy about the steadily mounting cost of doing so. They’re Warren’s base.

Unfortunately, the Dream Hoarders — and I include myself in their number — are a much bigger problem for the rest of America than the billionaires whose wealth Warren promises to expropriate. Those billionaires got that way by building companies that disrupted cozy local monopolies, and they fund coding camps for high-school dropouts; Dream Hoarders

  • protect their professional licensing regimes and
  • insist on ever more extensive and expensive educations in the people they hire. Dream Hoarders also
  • pull every lever to keep their own housing prices high — and poorer kids out of their schools — while
  • using their wealth to carefully guide their children over the hurdles they’ve erected.

Which may be why the best predictor of a neighborhood with a low degree of income mobility is not the gap between the top 1 percent and everyone else — the gap that Warren focuses on with all her talk of taxing billionaires — but

If you really want to unrig the system, you need to focus less on a handful of billionaires than on the iron grip that the Dream Hoarders have on America’s most powerful institutions — including, to all appearances, Elizabeth Warren’s campaign.

Who’s Afraid of the Budget Deficit?

Democrats shouldn’t put themselves in a fiscal straitjacket.

On Thursday, the best House speaker of modern times reclaimed her gavel, replacing one of the worst. It has taken the news media a very long time to appreciate the greatness of Nancy Pelosi, who saved Social Security from privatization, then was instrumental in gaining health insurance for 20 million Americans. And the media are still having a hard time facing up to the phoniness of their darling Paul Ryan, who, by the way, left office with a 12 percent favorable rating.

There’s every reason to expect that Pelosi will once again be highly effective. But some progressive Democrats object to one of her initial moves — and on the economics, and probably the politics, the critics are right.

.. The issue in question is “paygo,” a rule requiring that increases in spending be matched by offsetting tax increases or cuts elsewhere.

You can argue that as a practical matter, the rule won’t matter much if at all. On one side, paygo is the law, whether Democrats put it in their internal rules or not. On the other side, the law can fairly easily be waived, as happened after the G.O.P.’s huge 2017 tax cut was enacted.

But adopting the rule was a signal of Democratic priorities — a statement that the party is deeply concerned about budget deficits and willing to cramp its other goals to address that concern. Is that a signal the party should really be sending?

.. Furthermore, there are things the government should be spending money on even when jobs are plentiful — things like fixing our deteriorating infrastructure and helping children get education, health care and adequate nutrition. Such spending has big long-run payoffs, even in purely monetary terms.

Meanwhile, the federal government can borrow money very cheaply — the interest rate on inflation-protected 10-year bonds is only about 1 percent. These low borrowing costs, in turn, reflect what seems to be a persistent savings glut — that is, the private sector wants to save more than it’s willing to invest, even with very low interest rates.

Or consider what happened after Democrats enacted the Affordable Care Act, going to great lengths to pay for the additional benefits with tax increases and spending cuts. A majority of voters still believed that it increased the deficit. Reality doesn’t seem to matter.

.. Anyway, the truth is that while voters may claim to care about the deficit, hardly any of them really do. For example, does anyone still believe that the Tea Party uprising was a protest against deficits? From the beginning, it was basically about race — about the government spending money to help Those People. And that’s true of a lot of what pretends to be fiscal conservatism.

.. In fact, even the deficit scolds who played such a big role in Beltway discourse during the Obama years seem oddly selective in their concerns about red ink. After all those proclamations that fiscal doom was coming any day now unless we cut spending on Social Security and Medicare, it’s remarkable how muted their response has been to a huge, budget-busting tax cut. It’s almost as if their real goal was shrinking social programs, not limiting national debt.

.. So am I saying that Democrats should completely ignore budget deficits? No; if and when they’re ready to move on things like some form of Medicare for All, the sums will be so large that asking how they’ll be paid for will be crucial.

Trump’s Ignoring Our Real ‘National Emergies’

  • If the caravan proceeds by foot, during the period of its journey 16,800 Americans will die from drugs.

  • In the period of the caravan’s journey, perhaps 690,000 Americans will become homeless, including 267,000 children.

  • In the period of the caravan’s journey, 8,850 Americans will die from guns, including suicides and murders.

  • In the period of the caravan’s journey, perhaps 9,000 Americans will die from lack of health insurance (people die at higher rates when they’re uninsured, although there’s disagreement about how much higher).

Maybe the real “National Emergy” is drugs, homelessness, gun deaths and lack of health insurance?

.. the issue isn’t really even immigration. Rather, it’s fearmongering. Scholars have found that reminding people of dangers makes them temporarily more conservative, so this kind of manipulation can be an effective campaign tactic.

Remember the 2014 midterm elections? This is a replay. In the run-up to voting, Republicans ratcheted up fears of a “border crisis” with terrorists sneaking in from Mexico to attack us, plus alarm about Ebola and the risk that the outbreak in West Africa could reach America.

.. Trump also tweeted then that if a New York physician who returned from West Africa developed Ebola (as he later did), “then Obama should apologize to the American people & resign.”

In the 2014 elections, Republican candidates ran hundreds of ads denouncing the Obama administration’s handling of Ebola. News organizations chronicled this “debate,” but in retrospect they were manipulated into becoming a channel to spread fear — and win Republican votes.

.. Yet Ebola, like the Central American caravan, is a reminder of the distinction between grandstanding and governing.

.. Obama’s technocratic Ebola program — working with France and Britain, plus private aid groups — may have worried voters, but it was effective.

.. the Ebola virus was contained and eventually burned out. Good governance often turns out to be bad politics, and vice versa.

.. Perhaps the approach with the best record is aid programs to curb gang violence in countries like Honduras, to reduce the factors that lead people to attempt the dangerous journey to the United States. Yet it’s not tangible and doesn’t impress voters. So Trump instead is talking about an expensive wall and about cutting aid to Central America, even though this would magnify the crisis there and probably lead more people to flee north.

.. I fear that we in the media have become Trump’s puppets, letting him manipulate us to project issues like the caravan onto the agenda.

.. Trump is right that, although there’s no evidence of it, “there could very well be” Middle Easterners hiding in the caravan. It’s equally true that the Easter Bunny “could very well be” in the caravan. Speaking of Easter, Jesus Christ “could very well be” in the caravan.

.. So let’s stop freaking out about what “could very well be” and focus on facts. Here are two:

  1. First, the Caravan won’t make a bit of difference to America.
  2. Second, we have other problems to focus on, from drugs to homelessness to health care, that genuinely constitute a “National Emergy.”

People vs. Money in America’s Midterm Elections

They seek to restore access to a middle-class life by providing decent, well-paying jobs, reestablishing a sense of financial security, and ensuring access to quality education – without the chokehold of student debt that so many graduates currently face – and decent health care, regardless of pre-existing medical conditions. They call for affordable housing and a secure retirement in which the elderly are not preyed on by an avaricious financial sector. And they seek a more dynamic, competitive, and fair-market economy by curbing the excesses of market power, financialization, and globalization, and by strengthening workers’ bargaining power.

These perquisites of a middle-class life are attainable. They were affordable a half-century ago, when the country was substantially poorer than it is today; and they are affordable now. In fact, neither America’s economy nor its democracy can afford not to bolster the middle class. Government policies and programs – including public options for health insurance, supplementary retirement benefits, or mortgages – are crucial to realizing this vision.

.. In a normal democracy, these ideas would, I am confident, prevail. But US politics has been corrupted by money, gerrymandering and massive attempts at disenfranchisement. The 2017 tax bill was nothing short of a bribe to corporations and the wealthy to pour their financial resources into the 2018 election. Statistics show that money matters enormously in American politics.