Monday, March 11, 2019

Two Theories of Politics: Zero-Sum vs. Self-Reinforcing Change

Frank Pasquale

The FT's Edward Luce recently judged that “America’s intellectual energy is now on the left.” With light comes heat, and there are vigorous debates among progressives on fundamental questions in tech, health, employment, energy, and finance policy. I am less concerned about the in-fighting than about the outdated theories of political change it sometimes presumes. A broad popular front united against Trumpist patrimonialism may fragment if too many within it are committed to too narrow an approach to policy. I’ll give two examples of this danger, while explaining a theory of political change to justify policy bricolage.

My first example is the recent pile-on by economists jostling to discredit Modern Monetary Theory (MMT). The core idea behind MMT is that government spending faces a flexible inflation constraint, not a hard-and-fast debt constraint. Sometimes government spending can spark demand-pull inflation: too much money chasing too few resources and goods. However, wise macroeconomic investment can reduce prices as well, or produce a mixture of raised and lowered prices. Think of the extraordinary decline in the price of software, computing capacity, and data storage over the past two decades. Investment paid dividends there—and can do so on a much larger scale. Moreover, as Cornell law professor Robert Hockett has argued, there are many ways to identify inflation early, and nip it in the bud, if government spending causes certain scarcities.

Some aspects of MMT are established features of macroeconomic thought. For example, its emphasis on government’s central role in the economy recalls Keynes’s General Theory of Employment, Interest, and Money. Keynesianism took root amidst a global depression, when unemployment sparked enormous personal suffering and political upheaval. Its revival now is unsurprising, given the problem of youth unemployment in much of the industrial world, and the decades-long worsening of work conditions for those suffering the indignities of “fissured workplaces” in the developed world.

Liberals like Paul Krugman and leftists like Doug Henwood have passionately attacked MMT. I have neither the time nor the space here to adjudicate all the merits of their critiques, and the many forceful responses developed by economists like Stephanie Kelton and Pavlina Tcherneva. But I think a common problem for the critics is that they fail to contextualize the conditions out of which MMT arose, as Brian Beutler does here:
For decades now, Republican administrations have created enormous deficits with regressive, inequality-widening tax cuts, then turned around and cited those very deficits as a pretext to demand that their Democratic successors adopt austerity budgets without raising taxes at all. . . . It was against that backdrop that MMT began making headway on the left. Only later, in response to stagnant wages, the Republican assault on the Affordable Care Act, ecological crisis, and Donald Trump, did the progressive agenda shift leftward. . . .
Everyone on the left who supports the emerging Democratic presidential primary policy consensus should stop and remind themselves that any effort Democrats put into making sure their priorities are “paid for” in the orthodox sense will be wasted the moment Republicans take back over and pass their next tax cut. . . . The left is either going to beat conservatives at the game of chicken they have forced us into, or it is not. In either case, squabbling over the merits of MMT is just more whistling past the graveyard.
I do not know whether a Medicare for All plan in 2021 needs to be 60 or 70 or 90% “paid for” by taxes or reallocation of extant health care funding, and how much could be funded by monetary operations or currency creation. But neither do Henwood or Krugman. I agree with Jeff Spross that, “if the U.S. actually succeeded in passing a Medicare-for-all program with dollar-for-dollar matching taxes, it would be overkill. The country would offset the spending too much, remove too much demand, and leave the economy below full employment.” The key question now is how the keep the austerians at CBO, the Peterson Institute, and Third Way from stifling real reform with the deficit alarm bells they ring weakly, if at all, at trillion dollar tax cuts for the wealthy and endless wars. MMT helps by emphasizing the government's power to create credit on good terms for everyone (not just well-connected TARP recipients).

Thus Steve Randy Waldman is right to argue that “If you think MMT is good politics but bad economics, it may be worth asking whether there isn’t some tweak or reform that would render the economics acceptable and retain the good politics.” The alarm about MMT seems to be built on an idea that political economy is not a Lindblom-ian muddling through, but rather is some kind of exacting science, where we have one chance to “get things right” and must calculate in advance a perfected calculus of government action. This precisionist view in turn feeds on a zero-sum vision of political change, where any energy put into, say, a health reform program that is too ambitious, is energy that could have been better spent on, say, boosting the tried-and-true technocratic alternatives of slightly larger premium assistance tax credits, better network adequacy requirements, and more sophisticated “shopping tools” on the exchanges.

Winning Begets Winning

I think the right has a very different theory of political change---where initiatives large and small, foundational or incremental, are welcomed as ways of weakening the opposition and building resources for political fights in the future. Rather than zero-sum, the right's vision of politics is one of self-reinforcing change, where a fight builds power, which is then used to set the terms of next fight more in their favor, which makes it easier to build even more power later. That dynamic is most obvious in serial redistrictings that will tilt US politics rightward for decades on end (barring some miraculous intervention in gerrymandering litigation by SCOTUS, or the tactics David Faris describes).

Self-reinforcing change is also clear in capital's siege of labor over the past 80 years. Taft-Hartley helped make unions too weak to fight back against other hostile legislation. Weakened unions were not able to stop more generally anti-worker legislation. Precarious private sector workers then began responding to political appeals to pull public sector workers down to their level of wages and benefits. The final frontier of capital’s political war on labor is a blunderbuss attack on occupational licensing, coupled with the cynical deployment of antitrust law to hamstring independent workers who want to collectively bargain with tech giants like Uber. Meanwhile, the use of contracts to eviscerate workers' privacy protections (and other rights) helps bosses police the restive workers that remain.

I have seen little evidence that those on the right, seeking to reduce the power of labor relative to capital, were overly worried about whether there were some conceptual or even practical tensions between these many facets of anti-labor policy. Rather, they realized that there was a relatively clear-cut divide, and they would take the side of capital (often disguised or rationalized as consumer interests) in order to reduce wages and benefits of workers. By bringing many liberals on board, they also helped create an impression among some marginalized workers that the state was simply unwilling or unable to help them. That learned helplessness was another self-reinforcing dimension of political change, enabled by a clear-eyed view of the fundamental tension between capital and labor shares of national income.

In the realm of finance, Krugman and Henwood realize the power of finance capital, and say they want to reduce it. One way to do so would be hold their fire on experimentalist approaches to public finance on the left (which may be needed to counteract the many experiments imposed on the country by the right). MMT is a powerful set of ideas for building confidence in the state’s ability to fund and promote a more efficient, robust, and equitable economy. And in an era of climate emergency and threats to employment from automation and trade, the real question is not "can we afford a Green New Deal," but how we can afford to go without one.

The same type of big tent thinking needs to be popularized on the left as well. If you’re for Medicare for All, it doesn’t make much sense to tear down proposals to increase the medical loss ratio for insurers, or reduce the age of eligibility for Medicare. Yes, it is necessary to have a broader vision of the ultimate goal of reform: better care for all. But given many regions’ Democratic primary voters’ lingering allegiance to centrists or long-serving office-holders, something like Pramila Jayapal’s model of single-payer may be very hard to pass. Chipping away first at the power of the big insurers and pharma, and then at monopolistic hospital chains and parasitic intermediaries, will be crucial. And each effort to weaken them, taking away funds they’d otherwise use to gain more political power, will in turn make it easier to support further efforts to promote the interests of patients (and workers) in the health care system.

As David Kaib puts it, "winning begets winning." Whatever your critique of ACA (and I have plenty), it performed a crucial function in changing the conversation away from the "consumer-directed health care" dystopia broached in the Bush fils era. The ACA's Rube Goldberg neoliberalism is not sustainable, but it was at least a step in the right direction when the leading rival options were HSAs and McSurance.

In short: both bold visions and incremental improvements have a place in popular front politics. Those who’d unite to address climate crisis, a broken health care system, excess financialization, and tech platform power may not agree on everything, and may even disagree on ultimate ends. But we are so far in the hole now that “all of the above” makes a lot more sense than deductive elimination of options. We can all do more to figure out how proposals for reform and fundamental change reinforce, rather than rival or detract from, one another. The right has done as much for decades. It’s time to learn from their success, rather than mistaking the messiness of the political for the cool disputation of the seminar room.

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