FacebookTwitterGoogle+RedditEmail

Beyond Loser Liberalism

by DEAN BAKER

Last week Thomas Edsall had a column in the New York Times where he directly stated that the difference between conservatives and liberals is the extent over which they are willing to reverse market outcomes to redistribute money from winners to losers:

“…the two sides are fighting over what the role of government in redistributing resources from the affluent to the needy should and shouldn’t be.”

This was annoying not only because it is so seriously wrong, but also because this statement came from one of the more astute observers of American politics alive today.

Anyone trying to understand the role of the government in the economy should know that whatever it does or does not do by way of redistribution is trivial compared with the actions it takes to determine the initial distribution. Rich people don’t get rich exclusively by virtue of their talents and hard work; they get rich because the government made rules to allow them to get rich.

To take an obvious example, according to the Centers for Medicare and Medicaid Services we spend close to $300 billion a year on prescription drugs. If drugs were sold in a free market, without government-granted patent monopolies, we would spend around $30 billion a year.

The difference of $270 billion a year is more than five times as much money as is at stake with extending the Bush tax cuts to the wealthy. By making us pay far more for drugs, the government’s patent policy is redistributing a huge amount of money from ordinary people to the shareholders and top executives of the drug companies. We need a way to finance drug research, but there are far more efficient mechanisms than patent monopolies that don’t redistribute income upwards in the same way.

In a similar vein our policy on labor unions is incredibly one-sided in management’s favor. If a company illegally fires a worker for trying to organize a union, the complaint would go to the National Labor Relations Board (NLRB). It is likely to take months and possibly years before the complaint is settled. Even if the worker can prove their case (employers rarely admit that they fired someone because they were organizing a union) the fine to the company is trivial. As a result, breaking the law and getting rid of agitators can be very profitable for the company.

On the other hand, if workers stage a strike that violates the law, for example a wildcat strike at a time when a contract is in force or a secondary strike in support of other workers, a company can typically get an injunction immediately. If the workers continue their strike, their assets will be seized and their leaders thrown in jail.

Needless to say, this incredible asymmetry tilts the field in management’s favor. It is difficult for workers to organize unions and it is often difficult for organized workers to push for better wages and working conditions. That is not just a market outcome; this is the result of deliberate government policy.

The downturn we are currently suffering through is also the result of government policy. This is for two reasons. First, we got here because of the ineptitude of top policymakers in failing to recognize the housing bubble and the risks that it posed to the economy. The Federal Reserve Board just stood back and let the housing bubble grow to a size where its collapse would inevitably wreck the economy.

Furthermore, once the bubble burst, the Fed, Congress, and the White House have opted not to take the actions needed to restore full employment. While the Fed has taken steps to boost the economy, it certainly could have done more. Similarly, Congress did not approve a large enough stimulus package to offset the hit from the collapse of the housing bubble.

And, President Obama and the Fed have not tried to push down the value of the dollar to make U.S. goods more competitive in world markets. A lower-valued dollar could create millions of new jobs, most of which would be in manufacturing. However, because an over-valued dollar benefits powerful interest groups, like the financial sector, policy makers have been willing to allow the dollar to remain over-valued at the cost of millions of jobs for ordinary workers.

There are many other ways in which government policy has acted to redistribute money from ordinary workers to the 1 percent. This was done through the setting of the rules. And the amount of money at stake in designing these rules dwarfs the amount of money that we might fight over when we talk about tax policy that redistributes “resources from the affluent to the needy.”

If progressives restrict ourselves to fighting over the tax code, then we are playing in the sandbox. This is classic “loser liberalism.” The real battle is over setting the rules, not shuffling around a few crumbs after the fact.

The issue is not, as some have put it, leaving our neighbor by the side of the road. The issue is that our neighbor has been thrown off the bus. The first step toward getting him back on the bus is to say as loudly and clearly as possible exactly what happened.

Dean Baker is the co-director of the Center for Economic and Policy Research (CEPR). He is the author of False Profits: Recovering from the Bubble Economy.

This article originally appeared in Al Jazeera English.


More articles by:

Dean Baker is a macroeconomist and co-director of the Center for Economic and Policy Research in Washington, DC. He previously worked as a senior economist at the Economic Policy Institute and an assistant professor at Bucknell University.

Weekend Edition
February 23, 2018
Friday - Sunday
Richard D. Wolff
Capitalism as Obstacle to Equality and Democracy: the US Story
Paul Street
Where’s the Beef Stroganoff? Eight Sacrilegious Reflections on Russiagate
Jeffrey St. Clair
They Came, They Saw, They Tweeted
Andrew Levine
Their Meddlers and Ours
Charles Pierson
Nuclear Nonproliferation, American Style
Joseph Essertier
Why Japan’s Ultranationalists Hate the Olympic Truce
W. T. Whitney
US and Allies Look to Military Intervention in Venezuela
John Laforge
Maybe All Threats of Mass Destruction are “Mentally Deranged”
Matthew Stevenson
Why Vietnam Still Matters: an American Reckoning
David Rosen
For Some Reason, Being White Still Matters
Robert Fantina
Nikki Haley: the U.S. Embarrassment at the United Nations
Joyce Nelson
Why Mueller’s Indictments Are Hugely Important
Joshua Frank
Pearl Jam, Will You Help Stop Sen. Tester From Destroying Montana’s Public Lands?
Dana E. Abizaid
The Attack on Historical Perspective
Conn Hallinan
Immigration and the Italian Elections
George Ochenski
The Great Danger of Anthropocentricity
Pete Dolack
China Can’t Save Capitalism from Environmental Destruction
Joseph Natoli
Broken Lives
Manuel García, Jr.
Why Did Russia Vote For Trump?
Geoff Dutton
One Regime to Rule Them All
Torkil Lauesen – Gabriel Kuhn
Radical Theory and Academia: a Thorny Relationship
Wilfred Burchett
Vietnam Will Win: The Work of Persuasion
Thomas Klikauer
Umberto Eco and Germany’s New Fascism
George Burchett
La Folie Des Grandeurs
Howard Lisnoff
Minister of War
Eileen Appelbaum
Why Trump’s Plan Won’t Solve the Problems of America’s Crumbling Infrastructure
Ramzy Baroud
More Than a Fight over Couscous: Why the Palestinian Narrative Must Be Embraced
Jill Richardson
Mass Shootings Shouldn’t Be the Only Time We Talk About Mental Illness
Jessicah Pierre
Racism is Killing African American Mothers
Steve Horn
Wyoming Now Third State to Propose ALEC Bill Cracking Down on Pipeline Protests
David Griscom
When ‘Fake News’ is Good For Business
Barton Kunstler
Brainwashed Nation
Griffin Bird
I’m an Eagle Scout and I Don’t Want Pipelines in My Wilderness
Edward Curtin
The Coming Wars to End All Wars
Missy Comley Beattie
Message To New Activists
Jonah Raskin
Literary Hubbub in Sonoma: Novel about Mrs. Jack London Roils the Faithful
Binoy Kampmark
Frontiersman of the Internet: John Perry Barlow
Chelli Stanley
The Mirrors of Palestine
James McEnteer
How Brexit Won World War Two
Ralph Nader
Absorbing the Irresistible Consumer Reports Magazine
Cesar Chelala
A Word I Shouldn’t Use
Louis Proyect
Marx at the Movies
Osha Neumann
A White Guy Watches “The Black Panther”
Stephen Cooper
Rebel Talk with Nattali Rize: the Interview
David Yearsley
Market Music
FacebookTwitterGoogle+RedditEmail