Larry Summers misses another important point

He's clueless about the consequences of inequality

From time to time, Larry Summers gets things very wrong. He hypothesized that women were largely underrepresented in the sciences at least partially because of innate gender differences.

He championed bank deregulation during the Clinton years ("...it would take a Republican Congress and the Clinton administration’s Robert Rubin and Larry Summers at Treasury to repeal Glass-Steagall."), a deregulatory step that others, including Ron Suskind, author of Confidence Men: Wall Street, Washington and the Education of a President, suggest had much to do with the economic collapse of 2008.

And, following that collapse, from which he seemed to have learned the wrong lessons, Summers, along with Tim Geithner, was one of the leading actors pushing bank and corporate bailouts and downplaying stimulus spending and infrastructure investment within the Obama administration.

As Dean Baker put it in "How Larry Summers' memo hobbled Obama's stimulus plan," posted on common dreams.org, "In short, while the data was crying out for more stimulus, the Obama administration openly embraced the need for deficit reduction, effectively slamming the door on the prospect of further stimulus. The basis for this original sin can be found in [Summers'] December memo, which, unfortunately, provided the administration's game plan long after it should have been clear that it had been superseded by events."

Susskind makes it clear that Summers' policy recommendations suffer, in part, from his high opinion of himself. "Instead of looking at [Summers'] record pockmarked with bad decisions, people see his extemporaneous brilliance and let themselves be dazzled. Summers' career has come to look, more and more, like one long demonstration of the difference between wisdom and smarts," Suskind wrote in Confidence Men.

But no matter the various judgments of history, Summers isn't going to go away. He blogs on economic and political issues for Reuters, gives lots of interviews and writes a lot of op-ed pieces. His latest piece, "American inequality goes beyond dollars and cents," ran in today's (June 9) Washington Post.

Summers' op-ed begins with a nod to Thomas Piketty's new book, Capital in the Twenty-First Century, which examines the growing inequality in income and wealth in the United States and around the world. "This is indeed a critical issue," Summers writes.

Later he observes that increasing "tax productivity" would not do "any noticeable damage to the prospects for economic growth," but quickly moves on from serious consideration of policy changes that might reduce inequality. Instead, he considers unequal outcomes in life expectancy and educational achievement, two areas in which Summers has never previously demonstrated much interest.

Nevertheless, he's happy to point out that differences in life expectancy for older people "more likely have to do with lifestyle and variations in diet and stress..." Summers also cites figures that make it clear that children from affluent families are exposed to many more "enrichment" experiences than are children from poor families, but, he concludes, that to address unequal outcomes we should not merely focus on inequality. "...it is crucial to recognize that measures to support the rest of the population in other ways are at least equally important," Summers writes, though he does not specify what those other "measures" might be.

In any case, what seems mightily important here is a point missed by Summers, but noted elsewhere by others, notably Paul Krugman and Robin Wells in "The Widening Gyre: Inequality, Polarization and the Crisis," which they wrote for inclusion in The Occupy Handbook, edited and compiled by Janet Byrne. Citing the work of political scientists Keith Poole, Howard Rosenthal and Nolan McCarty, Krugman and Wells argue that there's no separating inequality from the political polarization and gridlock of our time.

"Soaring inequality is at the root of our polarized politics," they wrote. That polarization has "made us unable to act together in the face of crisis. And because rising incomes at the top have brought rising power to the wealthiest, our nation's intellectual life has been warped, with too many economists co-opted into defending economic doctrines that were convenient for the wealthy despite being indefensible on logical and empirical grounds."

Krugman and Wells may not have been including Summers in their list of "co-opted economists," but given his demonstrated preference for bank deregulation and bailouts over significant stimulus spending, we should be forgiven for assuming Summers belongs on the list. Krugman and Wells see many of Obama's policy compromises with his intractable opponents in Congress as a direct result of inequality-linked political polarization.

In 2009, they wrote, "we arrived at a Keynesian crisis demanding a Keynesian solution--but Keynesian ideas had been driven out of the national discourse, in large part because they were politically inconvenient for the increasingly empowered 1 percent."

Summers would probably prefer not to be reminded that the policies he has advocated in the past have done little to protect ordinary Americans from economic hardship. His Post op-ed actually includes a shout-out to progressive economist Dean Baker, suggesting that Summers would like us to forget his track record. But we ought not forget--if we want to reduce income inequality (and political polarization), and if Hillary Clinton follows Obama to the presidency, we want to do our best to make sure that Larry Summers finds employment somewhere other than the federal government.

Compromise or Betrayal

The Politics of Gridlock

So, I wrote the Washington Post, again. Something like Letter to the Editor number lebenty-leben, I’m guessing. They didn’t get around to publishing it (quelle surprise!), but here it is:

Editor,

“Obama did not lead a U.S. retreat from the world,” Jackson Diehl writes in “Foreign policy red flags “(Post, Nov. 12). “Instead he sought to pursue the same interests without the same means.”

Obama has withdrawn ground troops from war zones, cut the defense budget, and backed away from nation-building projects and from U.S.-led interventions, Diehl tells us. That sounds to me like a decision to pursue distinctly different interests around the world and, more specifically, to make it clear that the U.S. will no longer police the world to secure all the advantages that once accrued under Pax America.

If my understanding is correct it might mean that U.S. corporations can no longer invest and operate globally backed by the threat of force. If my understanding is correct it might also mean that groups with historic grievances against the U.S. (real or imagined) will unfortunately have more space and freedom to plot anti-American violence. Indeed, that might make Americans a bit more vulnerable, a risk that we will have to figure out how to manage and reduce by other means. But if we can do this through a “lighter footprint” globally, we might become one of the principal architects of a more peaceful world.

Or is Diehl suggesting that a heavier footprint might get better results? Are we talking, say, the Bush footprint, which resulted in upwards of one million Iraqis and Afghanis dead or displaced, thousands of American fatalities, and a military budget that roughly doubled from the first Bush-year to the last? Is that the footprint Diehl is recommending?

Jeff Epton

That’s the letter, but there’s more to say, of course. Obama’s “lighter footprint” still includes drone attacks, Guantanamo and anything but a get-tough-with-Israel element, but at this time in history, and after almost 50 years of disappointment with American foreign policy, I’m more than willing to settle for half a loaf.

And, speaking of compromise, disgruntled leftist though I may be, I’m ready for more of it. If Barack Obama wants to trim a little around the edges of programs I support, including Medicare, in exchange for Republican votes for higher taxes on the wealthy, other revenue increases of various kinds, closing tax code loopholes or ending subsidies that supplement the profits of oil companies and hedge funds and other corporate actors, and continuing reductions in the military budget, I’m ready to sign on.

Some of those cuts likely will harm individuals and communities that need more, not less, government assistance or protection. But without Republican support for revenue increases the country will continue to be pummeled by the effects of political gridlock.

Of course, there are lots of possible compromises that will provide no long-term benefit. Any worthwhile deal with Republicans in Congress must be part of a strategic assessment that suggests that the Republicans who do compromise will be willing to do so more than once.

I don’t know what criteria to apply in reaching such a conclusion, but I’m fairly certain that there are Republican senators and representatives who believe that a deal of some sort would be better for the country than falling off the fiscal cliff and also believe that Republicans who continue on their present reactionary path might well be overwhelmed by an approaching demographic tsunami.

There will be plenty of folks who wish to argue with this approach. People who believe that compromise can easily convert to betrayal. Robert Borosage lays out that perspective in persuasive detail in “A ‘grand bargain’ on the fiscal cliff could be a grand betrayal.”

Borosage’s main argument is that going over the fiscal cliff will not immediately do the kind of damage that so many observers are predicting. Further, he says, the nation does not have a debt or deficit problem, but a jobs problem that needs to be addressed first. And, finally, that there is plenty of time next year, after going over the cliff that is not a cliff, to address the problems created by lapsed tax cuts and automatic budget cuts.

But I’m not persuaded. I agree with the proposition that getting more people back to work is more important than addressing the deficit. But what Borosage and I believe is not going to compel action. The end of the payroll tax cut is going to reduce household income for even the poorest working families by a meaningful amount. That’s not going to get anybody back to work. There are more layoffs coming, as well, as the fiscal cliff approaches.

Sorry I am that compromise is necessary, but January will not create a more flexible Congress or present new opportunities to pass another sorely needed stimulus bill. Stimulus items like spending for infrastructure, extending unemployment benefits, and preserving the payroll tax cut are going to take compromise, now or later. Election victories notwithstanding, coaxing the right number of Republicans to vote with Democrats is going to take giving up something.

Though Jackson Diehl’s Nov. 12 piece left something to be desired, two Post columnists wrote rather more interesting columns that ran on Nov. 14. Dana Milbank’s “The Confederacyof Takers” points out in substantial detail how well most red states do feeding at the public trough. “Red states receive, on average, far more from the federal government in expenditures than they pay in taxes. It is the opposite in blue states,” Milbank wrote.

Also, check out Harold Meyerson’s “The GOP’s gerrymandered advantages,” which points out that in Florida, Virginia, Ohio, Wisconsin and Pennsylvania congressional races, Republicans won 30 more seats in the House of Representatives than Democrats, despite the fact that Obama won the popular vote in those states by margins that should have led to a 30-seat Democratic advantage. That did not happen, Meyerson wrote, because Republican gubernatorial and legislative control of those states after the 2010 census permitted significant gerrymandering of House districts. “…by suppressing competition, and crafting uncompetitive districts, [Republicans] maintained their hold on the House last week.”

 Obviously, it will take a while before the full effects of the coming demographic change will swamp intransigent Republicans. In some cases, it will take Democratic victories in tight elections in state legislative districts over the next six years before redistricting will permit Democrats to once more exercise all the prerogatives of the majority party in Congress. But legislative victories for working people and minorities should come a little easier in the future than they have over the last four years.

In the meantime, we should all keep in mind that working people in the red states are suffering, too. After all, capital and organized commercial interests in the south, like weapons manufacturers, oil companies and agribusiness, are siphoning off a huge share of the federal largess that heads that way.

Ordinary folks in the red states are pretty much getting the same shaft as working people elsewhere. They may even have been getting it longer. The fact that they don’t seem to vote their own interests is a measure of how long they’ve been exploited and of the absence of unions to organize and message an alternative. While we are compromising, and strategizing our way to future victories, we ought to figure out a way to talk plainly and supportively to folks in the red states. They are Americans and they are our sisters and brothers.