Immigration

Mandatory E-Verify Would Overwhelm Social Security Administration, Increase Disability Backlog

Scott Hochberg — Thu, 15 Sep 2011 14:54:38 -0400

The train of threats to Social Security this year keeps on rolling, this time from the Chairman of the House Judiciary Committee. The “E-Verify” program threatens to undermine the Social Security Administration (SSA) and the millions of Americans who rely on it. Assuming the President stays the course and refuses to propose Social Security cuts, E-Verify would represent the biggest threat to Social Security that is currently on the table – aside from the Republican Presidential Candidates. (Click here for the Strengthen Social Security Campaign’s position on E-Verify.)

The legislation in question is called the Legal Workforce Act and comes under consideration by the House Judiciary Committee today. The bill is not primarily designed to cut Social Security spending – rather, it is meant to curb the legal employment of every undocumented worker in America. While immigration-related, a mandatory E-Verify program would also cripple SSA by draining limited funding and imposing heavy burdens on one of the most efficient government programs in existence.

In short, E-Verify is a tool designed to prevent the employment of undocumented workers in the United States. Employers run the personal information of new hires though the E-Verify electronic system, which is connected to the SSA master database of Americans with Social Security numbers. In its developmental stages, the program has been optional for employers, but this new legislation would make it mandatory. Bottom line: E-Verify would add significant responsibilities and workload to an agency that is already overworked and underfunded, and jeopardize the ability of future retirees and disabled workers to get their benefits in a timely fashion. Here’s how:

Mandatory E-Verify would cost American workers their jobs and create confusion at SSA.

When E-Verify finds an inconsistency between a name and that person's work authorization, it issues a "tentative nonconfirmation" (TNC), after which an employee has several days to contact SSA or DHS to correct the error or risk losing their job. Unfortunately, a significant number of these TNCs are issued in error. Amazingly, over half of all errors were falsely issued "final nonconfirmations,” a definitive finding that someone is not legally authorized to work, forcing their employer to fire them for no good reason. With a total American workforce of 154 million, that translates to over 770,000 jobs lost.

So what does this mean for SSA? It translates to an already overburdened staff that now has to deal with hundreds of thousands of extra calls and office visits, sometimes entailing a lengthy review process for individual cases. In 2008, when there were only 7 million E-Verify queries, 88,000 people called the 1-800 number or visited SSA due to E-Verify errors. If the program were mandatory, SSA would have to review 154 million records in the initial implementation period, causing nearly 2 million more calls into SSA during that period alone.

SSA is already underfunded and overburdened, and cannot afford to take on the consuming and perpetual E-Verify project.

SSA has long been underfunded. Agency administrative expenses alone have been shorted 8 of the last 10 years (compared with the amount it requested of Congress to operate at full capacity). There was a particularly huge cut in 2011, almost a billion dollars below the required level, which was part of the last-minute compromise between Speaker Boehner and the Democrats this past April. Because of those negotiations, SSA has already had to take several measures to limit its regular operations because it simply can't afford them -- many of which will increase costs further.

E-Verify proponents often claim that SSA would be funded to keep up with its new responsibilities. While that's possible, it's unlikely, given the Republicans' current impulse to cut every government program in sight. It's easy to imagine a scenario whereby SSA is forced to cut even more of its regular operations in order to accommodate the new E-Verify agenda. Critical goals of the agency, such as reducing the unacceptably long backlog for pending claims, would have to be ignored further into the future. Or maybe it was the point all along to cripple the administration of Social Security benefits themselves and attack this extremely popular program through the back door.

According to the American Federation of Government Employees, the union that represents SSA employees, SSA has already taken the following steps because of the reduced funding:

• Closed field offices 30 minutes early each day
• Stopped mailing the Annual Social Security Statement
• Instituted an agency-wide hiring freeze (excluding the hearings department)

And moreover, if SSA is funded at the current 2011 level through 2012 (probably a best-case scenario at this point), it would mean:

• They would lose another 4,400 employees, on top of the 3,500 they expect to lose this year, for a total reduction of 7,900 employees in two years.
• They would complete 2.8 million disability claims, nearly 400,000 fewer than in 2011, with pending levels rising from 845,000 to about 1.2 million and processing time exceeding 4 months.
• Each furlough day would result in approximately 19,000 retirement claims, 11,000 initial disability claims, and 3,000 hearings they would not be able to complete.

And all of this when there will be 10,000 new retirees claiming benefits each day for the next 20 years!

E-verify would remove millions of taxpayers from the pool that pays into Social Security, thus weakening the solvency of the Trust Fund.

As we've seen, the point of E-Verify is to remove illegal workers from legal employment, likely ending their tax contributions to Social Security and other federal revenue streams. This is a wasted opportunity, as any undocumented worker that pays taxes provides a net gain to the system (since they don't collect benefits). As we all should know by now, undocumented workers are not going to leave the country when E-Verify comes knocking. They fill an important niche in our economy and are here to stay -- the only difference is that more of them will be funneled into the underground economy, or miscategorized as (partially tax-exempt) independent contractors. One 2008 bill that would have made E-Verify mandatory without a pathway to legalization would have decreased federal revenue by $22 billion over 10 years.

Of the approximately 8 million undocumented workers, it is estimated that about two-thirds of them pay payroll taxes into the Social Security Trust Fund, accounting for $12 billion in 2007. (The Trust Fund is the total pot of surplus money paid into Social Security that is not immediately sent out as benefits, now totaling $2.7 trillion.) In total, undocumented workers have contributed somewhere between $120 and $240 billion to the Trust Fund, accounting for 5.4 to 10.7 percent of its total assets. In addition, these workers tend to be younger than the average American, so the impact of their tax contributions will grow as the Baby Boomers retire and the percentage of seniors in America rises from 12 percent to 18 percent. According to the chief actuary of SSA, without the contributions of undocumented workers, the Trust Fund would run out of assets six years earlier than estimated in the 2010 Trustees Report. That's staggering.

According to most experts, mandatory E-Verify wouldn't affect those who already receive Social Security benefits, because current beneficiaries receive their checks through a mostly automatic process. But this much is sure: nearly everyone else applying for new benefits would be affected. It is anyone's guess how SSA would respond to being buried with new caseloads at a time when, even pre-E-Verify, "unprecedented workloads combined with declining budgets [have] damaged [the agency's] service delivery," according to the SSA Commissioner himself. An employment verification system should only be part of comprehensive immigration reform, and should only come into being when these serious flaws have been fixed. For now at least, mandatory E-Verify is the surest way to threaten the social safety net with paralysis.

Bad Ideas Running Aground

Alan Jenkins — Tue, 08 Mar 2011 10:31:44 -0500

Over the last year, right-wing politicians introduced a slew of bills in Congress and multiple states that purported to address the problem of illegal immigration. The proposals ranged from replicating Arizona’s controversial SB 1070—which requires police to question people who “look” undocumented—to altering or reinterpreting the 14th Amendment to deny citizenship to the children of immigrants born in America. Today, however, the majority of those proposals are running aground, and for good reason. People around the country are increasingly rejecting them as unworkable, unaffordable, and inconsistent with our nation’s core values.

Americans across the political spectrum are rightly frustrated with our broken immigration system, and desperate for solutions. The proponents of these bills hope to take advantage of that frustration, pushing vindictive approaches that exploit our legitimate concerns and feed our prejudices. But they are losing traction as voters and lawmakers take a closer look.

Colorado, Kentucky, Nebraska, New Hampshire, Virginia, and Wyoming have all rejected extreme proposals targeting immigrants. And Montana, South Dakota, and others defeated proposals seeking to alter constitutional citizenship principles.

Fiscal analysis of proposed SB 1070 copycats in Utah and Kentucky found that they would cost taxpayers $11 million and $89 million, respectively, at a time when cities and states are facing record deficits. Police chiefs and sheriffs in Texas, Wyoming, and other jurisdictions spoke out against the laws, explaining that they would erode trust in law enforcement and, therefore, hurt public safety.

Business leaders have also opposed the provisions on the ground that they would disrupt commerce and repel tourists, sports teams, performers, and other groups whose members include or support immigrants—and who are crucial to jobs and business revenue. And legal experts explained that attempts to undermine the 14th Amendment or to supplant the federal government’s enforcement role were unconstitutional, and would spawn expensive litigation.

As these facts sank in, many who were initially attracted to these proposals began to have second thoughts, recognizing that they were not real solutions. And many more concluded that, in addition to being unworkable, the proposals ran counter to our ideals as Americans. Tampering with our constitutional freedoms, they rightly concluded, is no way to deal with our immigration problems. Nor is encouraging racial profiling by singling out people based on what they look like, instead of based on evidence of wrongdoing.

Civil rights groups, for example, formed a coalition, Americans for Constitutional Citizenship, to defend the integrity of the 14th Amendment. They declared that undermining it would create a two-tiered class of citizens and would be “decidedly un-American.” At the other end of the ideological spectrum, Conservatives for Comprehensive Immigration Reform opposed the constitutional changes as “a misguided attack on immigrants and a distraction from real congressional action on a practical and lasting solution to our broken immigration system.”

These groups agree that the real solution to our broken immigration system is commonsense federal immigration reform that includes smarter border controls and a process under which undocumented immigrants register, pay all taxes, begin learning English and start down a legal path toward citizenship. In the absence of federal action, however, realistic solutions are emerging at the local level to address the legitimate problems that some communities are experiencing.

Progressive legislators around the country are promoting policies like wage enforcement and workers’ rights protections, community policing, English and civics classes, and support for immigrant small business creation to foster jobs and increase tax revenues. Immigrant groups like the Border Network for Human Rights are working with law enforcement to develop public safety and border policies that protect all communities from harm while upholding human rights standards.

Unfortunately, cooler heads are not prevailing everywhere. Some extreme bills are still alive and kicking in several states, particularly in the South. Going forward, it will be important for those states’ voters and elected leaders to take a hard look at the facts, to contemplate the real solutions that are out there, and to consider the kind of nation that America aspires to be.

Summer Reading for When Markets Rule

William Neil — Mon, 16 Aug 2010 13:32:21 -0400

SUMMER READING FOR WHEN MARKETS RULE

August 15, 2010

Dear Citizens and Elected Officials:

Introduction
As we mentioned when we sent out Part I of the Essay Who is Obama’s “Forgotten Man?” one week ago, Part II was to follow as a review of four books, with commentary on contemporary events woven into the text.

The four books are, in the order reviewed:

• John Gray’s False Dawn: The Delusions of Global Capitalism, 1998.
• James Morone’s Hellfire Nation: The Politics of Sin in American History, 2003.
• Kevin Phillips’ Arrogant Capital: Washington, Wall Street, and the Frustrations of American Politics, 1994
• Robert Skidelsky’s Keynes: The Return of the Master, 2009.

We’ve chosen these books deliberately because they speak to our current crisis, and because they all are, in some way, written to rip-apart, if not yet re-reassemble, the timbers of the Right’s current political economy framing job.

Because the Republican Right has made “Immigration” a front page issue, readers particularly interested in that topic can jump right ahead to page 5 and the heading “A Hellfire Nation Toasts the Immigrants to see how crossing the border can become the equivalent of “original sin,” and how the impacts of NAFTA, from the Clinton years, have driven Mexicans over the border.

In False Dawn, John Gray shakes up everyone’s assumptions about the meanings of globalization, and he presents another idea which can only be seen as pure “heresy” here in the United State: that family disruptions, like the high rate of divorce, and social turmoil, such as high crime rates, have been at least in part caused by the reign of free markets, especially those “flexible” labor markets which are always being recommended by the World Bank, the IMF and most of the economics profession. Unfortunately, what is flexibility for management and the economists’ “efficient” labor markets can be, at the same time, pure hell for families, especially in a nation that so poorly provides for the adequate care of children.

He also broaches the term “The Great Incarceration,” which has led, in the U.S., to the largest percentage of citizens in jail in any major country since the days of Stalin’s Gulags. Here in the states we like to think of all those in jail as being part of a great campaign of “law and order,” and heartily deserving of their fate, a policy fully endorsed by Democrats, especially during the Clinton years. Gray suggests otherwise, and we add our own notion that The Great Incarceration could just as well be seen as the Center’s and Right’s policy alternative, going back to the late 1960’s and 1970’s, to the migration of industrial jobs away from the older cities, the refusal to develop a domestic version of the Marshall Plan for urban America, and the failure to create a national industrial policy. This is not an argument for letting violent criminals go free or unpunished; it is one for taking a broader look over many decades on who got locked up and for which crimes, and it notices that the incarceration rate continued to go up even as the crime rate dramatically declined. Thus we look at The Great Incarceration as a matter of political economy and policy choices, not as a simple sin-crime-punishment drama of so many bad people living in cities being set loose by the “excesses” of the 1960’s. And, we must add, it is impossible to make sense of the issue without a long and detailed look at the role race played, decade after decade.

In addition to Gray’s work, we recommend five other books about it, and call your attention to the fact that The Great Incarceration also plays a significant role in James A. Morone’s Hellfire Nation, with its central theme of the Great American moral dialectic: who do we blame when things go wrong, society or the individual?

In our handling of Kevin Phillips Arrogant Capital we pay tribute, perhaps final tribute, to one of America’s greatest writers about the political economy, who has now fallen silent, for reasons that are not yet clear. Although written in 1994-1995, you can pick the book up now and use it as a “field-guide” to the current failures of American politics, and the lessons of other commercial empires which could not solve the economic problems of their autumn years. The reason that this book got so little attention, and relatively speaking, so few reviews at Amazon.com, is suggested by the title of chapter three: “The crisis No One Can Discuss: U.S. Economic and Cultural Decline – And What It Means.” This book was written in an optimistic mood, and Phillips was recommending a still relevant series of reforms. We focus on some of the major ones and compare them to the path President Obama has instead followed, for better or worse.

If we had to choose just two books to recommend to young reformers thinking of coming to the Beltway region to help a nation in trouble, or for that matter, staying home and working locally, we would pick Hellfire Nation and Arrogant Capital.

Now that the Federal Reserve has indeed confirmed what many citizens already knew, that the “recovery” is faltering, there is no more timely book than Robert Skidelsky’s Keynes: Return of the Master. It really can help you understand the core dispute at the heart of economic policy today: whether it is the lack of demand in the private economy, or the increasing federal deficit/debt that is the major problem. It also speaks clearly to another debate from the 1930’s, still relevant today, as to why banks aren’t lending or consumers spending: whether it’s the lack of business confidence (and what causes that) or the lack of money in consumers’ pockets. Skidelsky’s handling of Keynes’ responses adds the depth missing from today’s policy debates, where the Democrats sound like Republicans on the Holy Grail of small business job creation, and the Republicans sound like they’ve called “A General Strike” against anything Democrats propose, no matter that it’s on traditional Republican policy turf.

But Skidelsky also introduces readers to the deeper, philosophical side of Keynes, the Keynes who saw the uglier side of capitalism, its work ethic bordering on a neurosis which endured even in folks who had already made their bundle, a capitalism whose harsher features were hopefully to fade away as its efficiencies built up greater and greater abundance. Keynes was not a socialist or, in a sense even, a committed philosophical egalitarian. But he did understand that extreme maldistribution of wealth, as we are now experiencing in the U.S., can undermine the broad demand necessary to keep capitalism functioning.

Alas, Keynes’ vision of the “Harmonious Society” now seems like a cruel joke in 2010; a “Society without Solidarity” might be the better description. We speculate that we are on the way to a new outbreak of Social Darwinism before we get to the greener pastures envisioned in Keynes’s 1930 essay “Economic Possibilities for Our Grandchildren.”

And now a word to the elected officials who are on our mailing list. Yes, we are fully aware that you are immersed in a very difficult election season and one made even worse by the mood of the country and our economic difficulties. We do read your flyers and your newsletters, mark them up and take notes for future writing. We know that you don’t have the time to read long essays in the heat of a campaign, even ones that directly explain why some of the policies you are advocating won’t help the economy or create jobs. So with your time short we’ve provided direct links to our own shortened book reviews which have been posted on Amazon.com. Here they are in the order of the books we review in the essay which follows.

http://www.amazon.com/False-Dawn-Delusions-Global-Capitalism/product-rev...

http://www.amazon.com/Hellfire-Nation-Politics-American-History/product-...

http://www.amazon.com/Arrogant-Capital-Washington-Frustration-American/p...

http://www.amazon.com/Keynes-Return-Master-Robert-Skidelsky/product-revi...

One of our readers recently commented – at a political fund raiser, no less, that when he gets our essays, they often have strange punctuation marks. We understand, and that’s why we attach the MS-Word version of what’s pasted in the Email – that should give you a clean, basic document if the copied content does not come through clearly. Of course, the punctuation problem is caused by a translation problem which means that, now more than a decade after the rise of the Internet in the late 1990’s, the private sector still has programs and software that are a milder version of the proverbial trains running on different gauges of track. We guess that the heavy hand of the FCC never got around to straightening this one out.

And one more observation, having to do with computers, the Internet, and reign of commerce and markets over all of life, every nook and cranny of it, a major theme of John Gray’s False Dawn. We can’t help but notice that the Internet, as experienced by the individual computer user, is getting slower and slower for two basic reasons. One is that sites (and it even applies to one’s own Email “in-box”) are being loaded ever more heavily with complex ads that slow everything down as your system must now not only load far more, but scan far more for possible hostile intrusions. In addition, as a direct part of this cycle, your chosen “defensive system,” like the McAfee we have, is now sending out up to two updates daily, something which was unheard of as little as three years ago. It’s getting as ridiculous as that old Mad magazine favorite from the Cold War, Spy vs. Spy – but it’s not funny anymore. It’s gotten so bad for example, that Alternet’s new format causes our computer to freeze up; we’ve told them that we have to stop using it and why, but have never gotten a response. Huffington Post, a great diverse site with lots of good commentary, is trending the same way, with loading and navigation times going way, way up, but without the freezes.

We don’t know whether you’re having the same experience, but it seems to us that the balance now has tipped way too far in favor of commerce and advertising, and the original “freedom” of the Internet, and even its “usability,” is being gobbled up and made subservient to these commercial trends. John Grey understands the deeper causes, and Keynes would have too. This isn’t just a technical problem: this is a value problem of confusing “means and ends.” It’s symptomatic of our broader troubles, and that’s why we’ve chosen the books we have.

And now to the reviews. We begin with a jolt to the conventional way of looking at the past 40 years, with John Gray’s False Dawn.

False Dawn Will Wake You Up
Mr. Gray, who has studied politics, economics and philosophy at Oxford and was a Professor of European Thought at the London School of Economics until his retirement in 2008, has won praise from some unlikely places, such as Bloomberg News and from two mainstays of the Economist magazine, John Micklethwait and Adrian Wooldridge. These globalization celebrators devoted several pages to Gray’s career in their 2000 book A Future Perfect, tracing his path from the 1980’s when he was “a member of Margaret Thatcher’s informal brain trust. As the Conservative party collapsed in the 1990’s however, so did Gray’s faith in free markets, and he embraced a succession of alternatives, ranging from communitarianism to environmentalism and culminating in antiglobalism.” Nonetheless, he remains “one of globalization’s most searching critics.”

We’re pleased to say we’ve “field tested” this book in Maryland when we led a discussion in a progressive book club in Montgomery County. This was during those dark days when Democrats had their heads down, when they weren’t scratching it in puzzlement, after the 2004 election. The consensus on the book was that it was not an easy read, but worth it, because people felt that they hadn’t seen anything quite like it. Grey writes in a very direct style, some would say blunt, for a philosopher, in a declarative, assertive manner, stating in a paragraph of propositions what it might take another author a whole book to work up to. So the reader will still be digesting the last assertion when Grey moves on, in the very next paragraph, if not the very next sentence, to serve the next dish on his political economy menu.

As we were thinking about our own selection process for this summer’s little reading list, about what the books actually shared in common, it struck us that aside from three of them being directly about “political economy,” they all took a historical approach to their subject matter, reaching far back in time to eras and centuries which preceded ours, but which help to illuminate a new rise of utopian thinking which has come to represent the Right’s universal free market project of the 1975-2008 period. With Gray in particular, it is his philosophical training that gives his writing its bold insights, adding further depth to the historical perspective he adopts. To an American audience accustomed to a short, tightly drawn news-cycle and tweeting, the book’s almost other-worldly grounding in the long flow of the Western intellectual tradition is enormously refreshing. Yet it will be disorienting to some, especially those who believe that America has been exempted from previous patterns in history, or that all utopian visions occur on the left. In some ways, he reminds us of a much milder centrist version of William F. Buckley Jr., although those who remember the late star of the TV series Firing Line will see a much lower key John Grey in this interview with Australian public television, from 2008, at http://fora.tv/2008/05/24/John_Gray_in_Conversation, which is 54 minutes in length.

If the Economist’s placement of Gray on the political spectrum was not exactly precise, we think you’ll understand why that’s the case, since Gray was a student and admirer of the late Isaiah Berlin, who was hard to place, but whom he reminds us was in turn a “Rooseveltian Liberal.” We believe you will both appreciate and benefit from the way Gray leads his readers out of the narrow policy boxes that both major parties in America have constructed for their members and the general public. Here are some examples to whet your appetites.

First, Gray makes an important distinction about globalization, separating out two distinct streams of influence, one recent, and one much older: “Much current debate confuses globalization…a trend that can be dated back to the projection of European power into other parts of the world in imperialist policies from the sixteenth century onwards…with the ephemeral political project of a worldwide free market.”(Page 215.) And then we have this startling, out-of-the-blue comparison, which American audiences never hear or read. It gets its power from the fact that America’s identity is at least partly based on its belief that it has a special mission and a unique way of life, which Presidential office seekers are required to swear allegiance to, our “American Exceptionalism.” Gray sees it as reinforcing something else though, a continuation of the 18th century Enlightenment’s “project of a universal civilization,” one marked, however, with its late 20th, early 21st Century stamp as the quest for “a single global market…in what is likely to be its final form.” And now comes the shocker: “it is not the only variant of that project to have been attempted in a century that is littered with false Utopias. The former Soviet Union embodied a rival Enlightenment Utopia, that of a universal civilization in which markets were replaced by central authority. The human costs of that defunct Utopia were incalculable.” (Page 3). And now for the further shock waves.

Not the Perfect Marriage: Free Markets and Social Stability
Without in any way suggesting that the costs of our current Utopian quest approach or mirror those so cruelly inflicted on the peoples of the old USSR, Gray nonetheless reminds his readers of the costs of the Right’s attempts at “social engineering,” a term heretofore held under patent by the Right, and hurled against liberals, and indeed which is still being hurled about in revisionist histories of the New Deal. We have mentioned in other essays the Right’s success at using wedge issues to try to break apart what remains of the Democrats old New Deal coalition (not much), and it’s commonly thought that they have had a permanent lock on “law and order” and “family values” issues, to mention two of their most familiar “monopolies.” Listen now to Gray’s assertions about what has been going on inside the US and Britain under the influence of the conservative revolution: “The innermost contradiction of the free market is that it works to weaken the traditional social institutions on which it has depended in the past – the family is a key example. The fragility and decline of the traditional family increased throughout the Thatcherite period…Birth’s outside marriage more than doubled during the 1980’s. One-parent families increased from 12 percent in 1979 to 21 percent in 1992…By 1991 there was one divorce for every two marriages in Britain – the highest divorce rate of any EU Country….Is it coincidental that no EU country apart from Britain has imposed American-style deregulation on its labour market? In those British cities in which Thatcherite policies of labour market deregulation were most successful in lowering rates of unemployment, rates of divorce and family breakdown were correspondingly highest.” (Pages 29-30.)

That’s some, but not complete preparation for this take on what has been happening inside the US. Can you imagine the reaction to a scholar going before any number of America’s family value religious organizations and making the following findings:

In the United States free markets have contributed to social breakdown on a scale unknown in any other developed country. Families are weaker in America than in any other country. At the same time, social order has been propped up by a policy of mass incarceration. No other advanced industrial country, aside from post-communist Russia, uses imprisonment as a means of social control on the scale of the United States. Free markets, the desolation of families and communities and the use of the sanctions of criminal law as a last recourse against social collapse go in tandem. (Page 2).

The Great Incarceration
And prior to this, you thought that all those criminals in American jails were there because, even four decades later, of the value devastations the sixties had wrought, the spread of terrible work habits amidst the American urban underclass, those lousy liberal-union dominated public schools, especially the urban ones, and, in the eyes of much of the religious Right, the fact that we had just raised a lot of “bad” individuals under all that liberal “permissiveness.” But this is a charge, and a line of reasoning which has grown less and less convincing as decade by decade the 1960’s recede, replaced in turn by Nixonland, the Reagans and the Bushes, by the law and order touting, welfare abolishing, end-of-big-government proclaiming Bill Clinton, and decades of conservative judges who have indeed set records for incarceration, locking “them” up and throwing away the key, even as crime rates peaked in 1992, and then steadily declined.

(Editor’s Note: Readers who don’t want to take Grey’s word for it, might enjoy any of the following, starting with James A. Morone’s Hellfire Nation, which is reviewed later in this essay – just a taste now: “The most startling neo-Puritan product is the army of Americans in jail;” the 86 page essay by Glenn C. Loury, with commentary by others, Race, Incarceration and American Values, 2008; Making Crime Pay: Law and Order in Contemporary American Politics by Katherine Beckett, 1997; The Great Disruption by Francis Fukuyama (2000);The Origins of the Urban Crisis by Thomas J. Sugrue, 1996; and last, but not least, a winner of the Bancroft Prize in American History, Roger Lane’s Roots of Violence in Black Philadelphia, 1860-1900, 1986.)

Grey’s work threatens the very categories which define American politics in 2010; in his view, the carte blanche written to free market capitalism and its embrace by American “conservatives” is actually a project in the inversion of their proclaimed values:

Free markets are the most potent solvents of tradition at work in the world today. They set a premium on novelty and a discount on the past…the free market is most recklessly short-termist in its demolition of the virtues that it once relied upon. These virtues – saving, civic pride, respectability, ‘family values’ – are now profitless museum pieces. They are bits of bric-a-brac, dusted off for public display from time to time by the Right-wing media, but having few uses in an economy founded on ephemera. The most enduring icon of the free market in the late twentieth century will not be Margaret Thatcher. It may well turn out to be Madonna. (Page 38, from the Chapter “Engineering Free Markets.”)

Grey on Target, Before the Crisis of 2008-2009
Pretty outrageous sounding, isn’t it? Now who is John Gray to dispute with the likes of Rush Limbaugh, Glen Beck, William Bennett and the voices from thousands of pulpits equating conservatism – and the current neoliberal economic system – with the preservation of conservative values? Well, consider these brief insights, published in 1998, so formulated a year or two earlier – on the trends in the world economy – and remember, John Gray is not a professional economist:

• “This virtual financial economy has a terrible potential for disrupting the underlying real economy, as seen in the collapse in 1995 of Barings, Britain’s oldest bank. Together with the accelerating development of global capital markets on which it stands, the virtual economy is a phenomenon unknown in the world’s economic history. Nothing like it existed pre-1914.” (Page 62.)

• “Ricardo (Editors Note: David Ricardo, that is; English “classical” economist who lived 1772-1823) recognized that technological innovation could be job-destroying. He did not share the modern faith that new employment will always arise automatically from the side-effects of new technologies.” (Page 86.)

• “Global laissez-faire may break down in an unmanageable crisis of the world’s stock markets and financial institutions. The enormous, practically unknowable virtual economy of financial derivatives enhances the risks of a systemic crash. How would America’s fractured society cope with a collapse in the stock market such as occurred in Japan in the early 1990’s?” (Page 198.)

We’ll close our brief on behalf of Gray’s False Dawn by visiting with his “Postscript” thoughts, on some themes we’ve been writing about since January of this year, especially about our economy’s failure to pursue, much less achieve, anything even approximating “full employment.” He also directly addresses two other values which are often thought to be old “conservative” ones. Here’s how Gray goes about it:

Amongst the human needs that free markets neglect are the needs for security and social identity that used to be met by the vocational structures of bourgeois societies…A contradiction has emerged…the chronic insecurities of late modern capitalism…corrode some of the central institutions and values of bourgeois life. The most notable of these social institutions may be that of the career…Few can now harbour any such hope. The deeper effect of economic insecurity is not to multiply the number of jobs each of us has in a working lifetime. It is to make the very idea of a career redundant… The post-war trend to embourgeisment is being reversed, and working people are being in some degree re-proletarianized. (Page 217, our emphasis.)

A Hellfire Nation Toasts the Immigrants
As we reflect upon the state of the Union in the extreme summer heat of July, 2010, with its endless procession of 90 plus degree days and high humidity, and with the still heated debate over Global Warming producing further carbon dioxide but no legislation, it only seems natural that when it comes to reading lists, we should once again recommend James A. Morone’s Hellfire Nation: The Politics of Sin in American History (2003). The book was also recommending itself because of the summer dynamics of the debate over immigration, a policy issue conservatives never seem to tire of working, even though it has so many twisting strands that it’s never entirely clear just how it is going to affect our politics. The hope of the Right is that the Democratic stance will further alienate the “blue collar” constituency, which will be losing their jobs and paying for immigrant “welfare” at the same time. What caught our eye was an article which contained a number of these tricky strands and which appeared in the July 19th edition of the NYTimes: “Obama Wins Unlikely Allies in Immigration,” by Laurie Goodstein. The unlikely allies for Obama in this case are some “evangelical Christian leaders,” although we have to note that the ones cited tend to come from the conservative portion of the evangelical movement – a movement which has a broader range when it gets mapped upon the political spectrum, although it’s probably true that the majority lean right in politics.

Two quotes in particular got us to thinking about the grand issues raised in Hellfire Nation. The first, from the well known Reverend Richard D. Land, who is the president of the public policy arm of the Southern Baptist Convention, is revealing for the way he views the potential for a new conservative coalition. That would be the one with Hispanics forming a crucial part, hence his support for Obama’s policy position on immigration. Land says “Hispanics are religious, family-oriented, pro-life, entrepreneurial…they are hard-wired social conservatives, unless they’re driven away.”

Yet this moderate approach to the issue doesn’t sit well at all with other more traditional religious conservatives, who place the sin-crime dynamic front and center for the 12 million or so Hispanic immigrants in the U.S. Thus Jay Sekulow of the American Center for Law and Justice, says “‘I think there’s a need to reform the system, but I don’t support amnesty.’” Bryan Fisher of the American Family Association, sounds like he could have supplied another Chapter in Hellfire Nation all by himself when he says “‘What my evangelical friends are arguing is that illegal aliens should essentially be rewarded for breaking the law. I think it’s extremely problematic from a Judeo-Christian standpoint to grant citizenship to people whose first act on American soil was to break an American law.’” Talk about “originalist’” theory in constitutional law; here’s a 21st century version of “original sin” against the American way of life which apparently can’t be redeemed. It’s as “fundamental” as one can get in the “strict father” morality of the Right.

Now the fascinating thing is that in terms of older debates about immigration and immigrants, it’s tough to pin the 19th century stigmas of lazy, drunken and shiftless – once attached to the Irish, and later the Italians - for example – on today’s Hispanics, who are if anything, so hardworking that Land can elevate them to the nation’s highest value pedestal: they are “entrepreneurial.” So we have to find something to tar their resumes with, and what better way than to say their American baptism, so to speak, is one of breaking our laws. Of course, the debate is heating up also with the national security/911 strand (not defending our borders) and the extra edge supplied by economic hard times: they’re taking our jobs and consuming national services – medical care and education, primarily. So, in effect, these are welfare recipients, and illegal ones – charges that don’t always surface yet are never far from the undertones of the public debate.

What’s missing however, are insights from history and political economy that would reveal in the 1980’s that it was the Reagan Administration’s fierce Cold War stance in support of the murderous far Right in Central America which sent millions fleeing to the U.S., the first wave of immigration which really gave the issue its initial impetus. As if the civil wars in Central American were not bad enough, neoliberalism in economics has been an economic disaster for most of Latin American during the 1980’s and 1990’s, no where more so than in Mexico. But don’t look too closely; it hurts to see how Mexico has fared after NAFTA and its correlation to increased migration to the U.S. Here’s John Gray again, who devotes about ten blistering pages of that chapter entitled “Engineering Free Markets” to the fate of Mexico: “Market reform in Mexico from the early 1980’s onwards has tended to widen economic inequalities and reverse the growth of the middle class that occurred in the previous forty years. This process accelerated with NAFTA, and moved into a new gear with the austerity programme instituted in the wake of the devaluation crisis of 1994 (Page 49)…In Mexico, perhaps more clearly than anywhere else, free market policies have manifestly failed; but they have left the society which they desolated with few positive options.” (Page 53.)

Does that sound anything like what is contained in the New York Times article? Of course not. And many Mexicans followed the one “positive” option open to them: they emigrated and crossed over into the United States. To understand how political debates like this one get transformed in the United States, there is no better guide than James E. Morone’s Hellfire Nation.

Who Do We Blame When Things Go Wrong?
Morone’s thesis is pretty straightforward. Our nation, which still heavily draws upon the moral influence of our 17th century Puritan founders, for better and for worse, has a strong tendency, when things go wrong, especially with the economy, to blame it on individual shortcomings and sins, rather than societal failures like a structurally unsound economy. Actually, Morone says, the Puritans gave us both strands of the tradition, at least initially. When things went wrong in the 17th and early 18th century, their famous sermons, the Jeremiads, not only listed the individual sins and sometimes the sinners themselves, they also pointed out that New England society was collectively violating the “covenant” oath that they had pledged their community to uphold. And, we had pointed out in Sinners in the Hands of An Angry Market, that Perry Miller, America’s preeminent historian of Puritan New England, found the greatest of conservative ironies: the Puritans’ Covenant was not being undermined by individuals who had morally plunged after the founding; they were following the injunction to work hard at their very secular callings, which were, subtly, decade by decade, undermining the earlier collective moral purpose.

However, in the nation at large, over time, the dual nature of this inheritance was not what was passed on to the broader society. Rather, the sin-sinner-crime of individuals and outsider groups has borne the burden of explaining why things go askance in the US. That’s our dominant tradition, with what Morone calls the Social Gospel playing an entirely secondary role, only taking the lead during times of incontrovertible economic disaster, such as in the wake of the Panic of 1893, and after the Great Depression.

Under the Social Gospel, a label which originated in late 19th century Protestantism and worked itself into the broader stream of Progressivism, c. 1896-1916, the terms of the social contract are reversed, the “emphasis shifts from the sinner to the system…rather than redeem the individual , reform the political system” becomes the cry. The Social Gospel, Morone explains, finally became the dominant tradition from 1932-1973, before being supplanted by a new wave of Victorian morals and neo-Victorian economics (neo-liberal) with the revival of the Right.

We have to say that if you’re looking for a book that will continue to pay you diverse intellectual rewards through its insights about the American Right, and how our society continually frames up issues, there is none better, and furthermore, it’s just plain hard to put down. Proceeding chronologically, with wonderful commentary, it’s a book we wish would be required reading in every high school’s and college’s history curriculum. But especially so in Texas; after all, it was selected as one of Christianity Today’s top ten books of 2003.

So let’s see how well what Morone calls “The Great American Moral Dialectic” – who to blame – the individual “sinner” or a structurally broken economy - works out in one example he couldn’t write about in 2003: the great mortgage fiasco.

Mortgage Fiasco: the Sinners, the System and the Rant of the Year
You’ve heard it everyday and nearly everywhere: if only individual mortgage holders had exercised personal responsibility, understood what they were signing and didn’t reach beyond their economic means, the entire crisis could have been avoided. Furthermore, sins were being committed in many originator offices: applicants lied about their wages, and often failed to supply proper documentation. This was individual moral irresponsibility writ large, which harmed everyone. So the story on the Right still goes. Rick Santelli, the options/futures market reporter on the CNBC network, shouted out the protest at the federal attempts to bail these sinners out: we have no responsibility at all for these “losers” who put an extra bathroom in houses they couldn’t afford… from February 19, 2009 at Youtube.com, “The Rant of the Year” at http://www.youtube.com/watch?v=zp-Jw-5Kx8k&NR=1 (We have to observe that the script couldn’t be any clearer had Morone written it himself.)

Entirely missing from Santelli’s take, however, is the fact that between 2003 -2009, an entire “assembly line” industry grew up, involving: yes, Fannie and Freddie, mortgage originators, mortgage brokers , mortgage bond insurers, mortgage securitzers, the famous Wall Street Banks and brokers, and the ratings agencies, a system so complex and interlocked, and in reality, so completely oblivious to the morality and/or quality of the actual loans themselves that it simply didn’t care whether the mortgage holders produced pay stubs or not. It was a collective, systemic late capitalism failure on a scale the world hadn’t seen since the stock speculation and interlocking trust system which collapsed in October of 1929. It’s such a mind-boggling systemic tale which is so oblivious to the individual sins of the little mortgage loan applicant that it’s amazing that Rick Santelli can, being an observer of sophisticated financial “innovations” himself on a daily basis, summon up that level of anger at the “Forgotten Man” sinner at the bottom of the economic pyramid. And indeed, if you listen and watch the video carefully, you’ll hear a little footnote of anger directed at the mortgage derivative inventors higher upon the food chain of the calamity. But it’s a wonderful illustration of Morone’s book and thesis, how Santelli “balances the moral books” against the individual sinner but not the broader economic system. (And we suppose it’s why Michael Lewis gives his new book on the financial crisis, The Big Short, the subtitle: Inside the Doomsday Machine.)

For a good take at how the system evolved over-time, eventually including some affordable housing non-profits, including parts of ACORN, in the Countrywide Credit-GSE (Government Sponsored Enterprises) network written from a left perspective, see Thomas Ferguson’s and Robert Johnson’s Too Big to Bail: The Paulson ‘Put,’ Presidential Politics and the Global Financial Meltdown, here at http://courses.umass.edu/econ804/Ferguson_Johnson1.pdf ; Part II can be found at
http://courses.umass.edu/econ801/Ferguson_Johnson2.pdf with the GSE-non-profit evolution at pages 8-12 of Part II. It’s a good answer to Republican charges of just another “government failure” exemplified by Fannie and Freddie, and makes clear that it was these GSE’s imitating the worst of the private sector trends that got them in so much trouble. But we still came away marveling out how many different players, private, governmental and non-profit became enmeshed in the subprime system, and how cynical the covering umbrella/rationale held up over the whole “enterprise” – making home ownership affordable to the working poor – became. As the authors point out, it’s a tale from the era of neo-liberalism, and shows how far the dominant philosophy of the age could cast its net.

The industrious, sturdy, well-prepared individual competing for work in the free markets of the nation, has been, James Morone tells us, a powerful, dominant guiding image for our nation. Wherever, and whenever the burden can be kept on the individual, and off the mechanisms and institutions of the markets themselves, then that’s been the traditional American response. The role the government might play in making the markets fairer – or indicating when they were not appropriate at all – is usually kept out of sight and off the policy table. But to show our readers just how powerful the ideological image is of the brave individual competing in the open marketplace, consider Morone’s description of President Andrew Johnson’s prescription of “laissez faire” for the fate of the newly freed slaves in the defeated South:

They had no property, little education, no right to vote, and – in some places – could not even move around freely. Yet Johnson was in no mood to lend a hand: ‘Their future prosperity and industry must rest mainly on themselves.’ If they ‘fail and perish away,’ said Johnson in 1865, ‘let us be careful that the failure shall not be attributable to any denial of justice.’ The market – even American history’s most profoundly unjust market – allowed him to pin responsibility for success and failure on black individuals, regardless of their impossible situation. (Page 205.)

And, might we ask, when it comes to unemployment and today’s “free markets” in labor, whether that is also the effect of Federal Reserve Chairman Bernanke’s policies? He has approached the problem from the most inventive monetary policies the history of central banking has ever seen – but he can’t seem to find it in his power or his intellectual universe to recommend the direct job creation models of the New Deal era, the era he has combed for monetary missteps, like Milton Friedman and Anna Schwartz before him. For someone so immersed in the history of 1929-1936, this is a remarkably blank, and cruel, intellectual page, with untold practical horrors in store for the people of the United States.

A Nation, a Political System, in Decline: Kevin Phillips’ Arrogant Capital
So what does the author of our third reading list book have to say about the “financialization” of the economy facilitated, celebrated and rationalized over the years under the Federal Reserve Chairmanships of Alan Greenspan and Ben Bernanke, spanning the years from 1987 right through to the present?

For the overall national economy, financialization has been a stage of decay, not triumph. An important yet small elite flourishes, but the average citizen is a loser. The odds are that the latest of theses stages in the United States will have a similar effect – and that the political and governmental failure in the late 1980s and early 1990s to deal with financialization and its abuses will leave a bad taste in the mouths of twenty-first century Americans. (Arrogant Capital, Page 112.)

This would be remarkable enough if it had been written in Kevin Phillips’ last book, Bad Money, published in 2008; having actually been written in 1994-1995, in Arrogant Capital: Washington, Wall Street, and the Frustration of American Politics, it takes on even greater authority as “the early call” on what has unfolded, right down to that “bad taste” in our 21st century mouths.

We make no secret that we miss Kevin Phillips, and have admired his courage as an author who challenged conventional wisdom and national tradition by asking how and why the United States would be able to escape the fate of previous economic leading powers which could not stem their declines: Rome, Spain, Holland, Britain. We have Googled repeatedly to ask why Kevin Phillips has fallen silent since his last appearance on Bill Moyers on September 13, 2008, (here at http://www.pbs.org/moyers/journal/09192008/watch2.html ) and by his total absence from news commentary since the spring of 2009. We don’t know whether he is working on another book (our hopes), has retired from the field (most likely) or is ill (our fears).

So let this be a tribute to him (but not a final one) and to what he left our nation back in 1994-1995. What he left us was so good that we told one young Maryland reformer that if we had only two books to recommend for guidance, then it would be Arrogant Capital and Hellfire Nation.

Even though Phillips acknowledged in the paperback edition, which carries a Preface date and address of May 1, 1995, Bethesda, Maryland, that the 1994 Republican “Revolution,” with its “Contract with America,” had already failed to change the Capital, he maintained that there was still “a case for optimism” to be made. That’s not the way he sounded in September of 2008, talking with Bill Moyers, who noted the pessimism, and asked him about it. That foreboding can be found throughout much of the later works of Phillips, especially in American Theocracy (2006) and Bad Money, with their repeated references, if not focus upon, previous leading world powers that could not reform themselves after their peak empire years. It’s there too in Arrogant Capital, but not yet the nearly dominant theme it would become, or the seeming final resting place with Moyers in 2008. We can give you a direct dose of the worry, from the still hopeful chapter in Arrogant Capital, “Renewing America,” especially chosen to emphasize how far Phillips had traveled from the Republican conservative theoretician he was in The Emerging Republican Majority (1969):

In retrospect, the rich of eighteenth-century Holland and Edwardian England should have been taxed more heavily, so that the public sector would have had funds the private sector refused to allocate to rebuild each country’s manufacturing economy and neglected infrastructure. (Arrogant Capital, Page 260.)

We highly recommend passing this quote along to the Tea Party supporters in your neighborhood, and sad to say, it probably would make your local Democratic Congressman fluster a bit too. But alas, Phillips qualifies this eye-opener in the very next sentence, stating “that is in theory, of course.” In practice, on the grounds of the Capitol, the reigning political dynamics won’t allow it to happen. Phillips looks outside the capital city for hope, knowing the history of such cities far too well to expect reforms to start there. Phillips deeply shares the American distrust of the place that Washington has become, starting in the 1940’s, 1950’s and 1960’s (“when the Permanent Washington took shape”) noting that his politics “has not been one of sympathy for the quiet collegiality of America’s richest metropolitan area or empathy with its institutions and maneuvers, but one of commitment to the populist processes of American electoral realignment and renewal” which “surge up from the grass roots or they do not come at all.” (Page xxvi, our emphasis.)

A Capital “no longer controlled by the general public”
He wrote these observations in 1994-5, but they ring as true today, fifteen years later, so that they could very well apply to the summer of our national disillusionment with yet another President. Phillips wrote of the “extreme volatility of America’s disenchanted electorate,” and observed that “politicians now have less and less time to fulfill public hopes and expectations.” The city itself has become what “ordinary citizens of the 1780’s and even some architects of the U.S. Constitution feared – a capital city so enlarged, so incestuous in its dealings, so caught up in its own privilege, that it no longer seems controllable by the general public.” (Page xix.)

Yet the hope of Phillips back in 1995 was that the United States could once again display its remarkable ability, as it had over its first two centuries, to “stage political revolutions or watershed presidential elections every generation,” sweeping out the “the old regime’s exhausted interest groups and elites from Washington.” Perhaps that’s why we haven’t heard much since from the somber Phillips of the Moyers interview: looking over the field of Larry Summers and Timothy Geithner and Ken Salazar, and many other very, very cautious key appointments, it doesn’t look like Obama has changed brooms, much less conducted a “clean sweep” of the “old regime.” Yes, it’s true that President Obama has passed the most progressive legislation since the New Deal, but that statement skips the Conservative dominance between 1980-2008, when we would be measuring Obama’s reforms against the Republican’s inverted universe of legislative intent, and Bill Clinton’s triangulating. That’s like comparing the Newtonian laws of gravitational pull in our little solar system to the strange gravity bending behaviors of galaxy enveloping black holes. And to pass the legislation, Obama has not reformed the Washington inside game, the game Phillips devotes so much time to analyzing, but instead has made his compromises with the existing powers; compromises so extensive and complex, as shown by the extreme lengths of the health care and financial reform legislation, that the public isn’t sure what he has obtained, and many decisions, and the future success of the work, has now been placed in the hands of regulators.

The End of “Watershed” Elections?
Phillips builds the case for American political genius, and his hopes, upon those sweeping, but nonviolent watershed elections of 1800 (Jefferson), 1828 (Jackson), 1860 (Lincoln), 1896 (a failed one, Bryant) and 1932 (Roosevelt). He was personally involved in making the case for one in 1968-1969, but knows the nation didn’t achieve it. Yes, the Republicans controlled the Presidency for 20 out of the next 24 years, from 1968-1992, but they were unable to win control of Congress, and we now have that volatile and impatient public, so well characterized by the Presidential race of 1992 (of Bush I, Clinton and Perot), and the extreme mood swings which have followed.

As with all sweeping political generalizations, one can quibble with this scheme, especially the closer one looks at the scope of changes ushered in with the supposed peaceful “revolutions,” and certainly with calling the election of Lincoln in 1860 a success. Yes, it was in the sense that he was still President four years later, and his party went on to be the dominant one of our Gilded Age, but any election that results in one of history’s greatest secessions and civil wars can certainly be argued in the opposite direction: that America’s political processes, built on incrementalism and compromise, failed to peacefully resolve the crisis of slavery.

However, from 1968 on, it has become clearer and clearer that the political genius of America is not working. And this is where Kevin Phillips has staked his claim, in our opinion, to being one of America’s greatest writers on politics and the political economy. By taking on directly what the American political system refuses to – “The Crisis No one Can Discuss: U.S. Economic and Cultural Decline – And What It Means” (the title of Chapter Three) - Phillips has performed a courageous public service, and done so with a clarity and dogged determination that few others have matched. And that’s why the silence over his absence is so disturbing.

We are impressed with many aspects about Phillips’ writing on American decline. But two stand out from the others. First, it has historical depth, putting it into the framework of the downhill slide of not only the ancient powers, Greece and Rome, but more convincingly, of the more contemporary leading economic powers, especially Spain, Holland and Great Britain. We note, however, his nearly complete silence on the fate of France in the second half of the 18th century, a curious one, given the cross fertilizations between France and the U.S., the American and French Revolutions, and their cultural affinities with the great intellectual storehouse of the Enlightenment, something which, as we have already seen, John Gray insists the U.S. is still deeply involved with, with its Utopian Universal Free Market Project.

Roots of National Decline: Moral or Economic?
Second, perhaps because of his origins as a conservative Republican breathing the cultural air which produced Richard Nixon and Patrick Buchanan and elevated, even further, Billy Graham from his 1950’s perch under Eisenhower, Phillips is sensitive to the cultural and moral aspects of national decline. That is something which conservatives and especially religious conservatives stress, while Democrats, and liberals, lean towards the emphasizing economic troubles. Phillips is fascinating with his illuminations on the way the two parties react to the notion of declension, deferring to their base constituencies: Republicans simply cannot accept the fact of American economic decline since their party has always been so heavily invested in our culture of business, and its main interest groups, and the religious Right is eager and urgent in advancing their ethical failings’ explanations for moral and cultural declension. On the other hand,

Liberalism and the Democratic Party happen to represent most of the constituencies and interests that view the moral and cultural upheaval of the late twentieth century as a national achievement: blacks, gays and lesbians, feminists, civil liberties activists, and others. Many of these groups are just as enthusiastic about their periods of breakthrough as entrepreneurs and stockbrokers were about the economic opportunity of the 1980’s – the notion of a ‘moral decline’ is unacceptable. (Pages 80-81.)

To this framework, however, we must add our own judgements. We have just seen how John Grey focuses on capitalism’s constant churning, its “creative destruction” impacts upon the family and social welfare. One of the oldest, and most infamous social engineering feats of capitalism – eliminating small scale agriculture and moving the “surplus” people to the cities, led to an alleged, and disputed, 60,000 prostitutes in London alone, at the height of “Victorian” modesty, and we don’t hear many contemporary Republicans, when talking about sex trafficking, noting that it has thrived in now thoroughly entrepreneurial Eastern Europe, where it has taken off after the fall of the puritanical Communists of the Cold War days, and risen, in general, around the world with the celebration of globalization, and its accompanying disruptions of what was left of traditional peasant life, thus repeating the social disruptions seen in Europe in the 19th Century.

And we would also observe, in that listing of Democratic constituencies and their issues, that they do not add up to anything remotely approaching a united focus on economic issues – far from it. Notice that labor was not mentioned; it seems to us that many feminists have embraced the culture of small business entrepreneurism as a means of freedom and independence (as well as substantial number of gays and lesbians) and it is not clear at all that these constituencies have much in common, especially in the upper middle class regions, with American labor on the topics of industrial decline and off shoring and the “financialization” of the economy. These are broad generalizations with doubtless many exceptions and subtrends - a strong defense of women’s rights from feminists in public sector unions, for example. Yet if one thinks about the constituencies arrayed on behalf of economic underdogs during two of the greatest periods of democratic renewal which Phillips calls to our attention – the Populist revolt of 1896 and the New Deal of 1933 – compared to this contemporary listing of causes and constituencies - it becomes much clearer why the Democratic Party of 1992-2010 cannot maintain a compelling economic narrative: there is no driving focus for reform among constituencies with very, very different compass directions.

And Phillips makes too sharp a distinction between the parties on their willingness to address economic decline; the Democratic Party’s embrace of Wall Street and globalization during the Clinton era is seen still by most Democrats as their second golden age (after the economy of the 1960’s), rather than the “financialization as a stage of decay” that Phillips sees, with his convincing parallels to other fallen economic empires. In fact, neither party has been able to harness the perception and reality of economic decline to rally the American people behind anything resembling an effective long term plan.

Tracking Moral Decline in Financial Bookeeping
Perhaps one day, and we’re not holding our breaths on this, an evangelical minister with a dual major in accounting and theology can write a tract on the curve of moral declension as traced through trends in financial bookkeeping, from 1975 right on through to the present shadow banking system and its many off-balance-sheet “vehicles” with the varied abbreviations that tend to sound like new forms of sexually transmitted diseases, as in SIVs, SIEs and SPEs. You could say it’s a way of calling for a balancing of the “moral books” with a slightly different focus than the usual one, the spotlighting of failing political marriages.

But we digress. One of the joys, and riches, of Phillips’ book is its handling of the contemporary practices of our nation’s capital, placing it in the company of others in history where neither of the two parties would like to find themselves, in “arrogant or atrophied capitals” which “have been front and center in most great-power declines.” Phillips is never better than when expounding upon the ways of the capital’s lawyers, lobbyists, the infamous revolving doors and their willing services on behalf of foreign governments. He reminds us of the populist instincts displayed in the early days of our republic, despite the stature of the founding fathers and their economic base in large land holdings. It’s a time when New York placed its capital, far, far upstream in Albany (we can’t say, based on how things have turned out there in 2010, that it was the “cure”), and Pennsylvania placed theirs in, of all out of the way places, Harrisburg, to keep it out of that famous den of iniquity and sophistication run by the Quakers in Philadelphia.

Blocking Change: Interest Group “Barnacles”
But for a nation now staring, once again, as in the 1990’s, at political stalemate, gridlock or sheer obstructionism in the capital - pick your favorite noun - Phillips offers us, amidst much, much else, the perspective of a now deceased (1998) economics professor from the University of Maryland, Mancur Olson, and his 1983 work, The Rise and Decline of Nations. Olson gives us the idea that it’s the relative absence of status-quo interest groups which help nations on the way up, as in 19th century America, and their tremendous drag on the way down, “with great nations heading into decline” impaired by “the interest-group barnacles collected during the long, fat years of their success, smugness and safety.” It hurt Britain in the early twentieth century and is hurting America now, Phillips says, translating Olson into the Washington of the 1990’s.

It’s the sheer number and proximity of all the lobbyists and the physical fact that in a sense, they have Congress “captive,” in isolation, away from the people who elected them that worries Phillips, along with the power of private money in elections. But does he overplay this hand of the “Inside the Beltway” special culture of the captive capital, echoing terrible historical precedents? Phillips doesn’t see America’s predicament as stemming from the Utopian, universal threats of the rise of the Right that more philosophical works do, such as Gray’s False Dawn. After all, if Phillip’s was leaning in that direction, it would have surfaced in his 2006 book, American Theocracy. By the time of the publication of Bad Money in 2008, he is certainly aware of Grey and gives one of the two epigraph quotes over to False Dawn, that “bad capitalism tends to drive out good.”

Phillips & The Forgotten Man
Yet they seem to arrive at very much the same place, the economic hardships (without Gray’s stress on the family disruptions) that the Right’s policies have brought down upon the middle classes (Phillips doesn’t say working class…even when talking directly about manufacturing wages…) It’s tough stuff, so here it is directly, and does anyone else hear echoes of FDR’s “Forgotten Man” in it?

The last thirty years have produced a national capital influence structure that represents the multinational corporations who move jobs from Wisconsin to Taiwan, not the anonymous Americans who suffer, that protects the financial giants who run the bond markets and mutual funds, not the ordinary folk who are at their mercy, and that favors the brokers, trade consultants, and communicators – who enjoy record incomes from the same globalization and polarization that has brought Middle America two decades of decline in real manufacturing wages. These trends would have happened anyway, but not to the same extent. It is foolish to expect the biases to change until the power structures of Washington are themselves transformed. (Page 223. Our Emphasis.)

Cures for the Arrogant Capital: where do we start?
And there it is, in that italicized last sentence, a sentence which hangs over the Obama administration and the choices it made in what reform measures to pursue first, and it also clouds the effectiveness of what it has in fact achieved. And there we have it: the reason we are recommending a book written in 1994-1995 is that the nation is still facing the crises Phillips delineates in Arrogant Capital, made even more urgent and painful by the scope of the economic crisis we are in.

Phillips didn’t leave us hanging in mid-air, however. His last chapter, “Renewing America,” contains ten broad “Proposals” for addressing the problems. The first five all are aimed at the imbalance of power between citizens and their unresponsive Capital and captive parties. Most of the rest are devoted to the economic inequalities stemming from globalization and financialization. As one might imagine from someone who has spent nearly his entire adult life writing at a highly skilled level about American politics and the political economy, the forty pages which cover his recommendations for reform are jammed with excellent proposals, most still not attempted. Here’s just a sample from Proposal 8, Confronting “…the Power of Multinational Corporations and Minimizing the Effects of Globalization on the Average American.” First, he notes again the historical pattern of declining powers’ wealthy citizens shifting their investments overseas. So, “Economic patriotism, quite simply, requires making individual and corporate investments overseas less rewarding than domestic ones. Second…Washington should rewrite its corporate foreign tax credit and foreign tax deferral provisions to discourage U.S. multinationals from investments that move jobs overseas. These loopholes also cost the treasury too much revenue.”

Because he covers so sweeping a policy universe in his Proposals, Phillips gives us the benefits of a “if I have to choose a half dozen,” moment at the end, and these are the ones he settled on:

1) dispersing the capital and having Congress meet in another city for part of the year; 2) allowing congressmen and senators to vote from their home states and districts; 3) establishing a mechanism for national referendums; 4) concentrating a major attack on the hired-gun culture in Washington; 5) reining in abusive finance and its political influence by regulating electronic speculation, curtailing the nonaccountability of the Federal Reserve board and establishing a federal financial transactions tax; and 6) funding deficit-reduction largely by taxing its obvious beneficiaries. The impact of these six changes alone would be powerful. (Page 268.)

Phillips and “Entitlement Reform”
We think that’s a pretty impressive insight from 1995 as to what’s been placed on the table in 2009-2010, (with the glaring omission of health care reform) especially numbers five and six. And in number six, he is not advocating “entitlement reform” via attacks on Social Security. Phillips has one of the most foresighted and sophisticated analyses of the “twin crises of debt and savings” we’ve come across, and he clearly saw the financial elite’s pending anti-egalitarian chess moves: “Reducing middle-class entitlements was the envisioned key to deficit reduction. But the consumption tax debate, as we shall see, offered the hoped-for avenue to further tax cuts for the rich.” These quotes are from Pages 134-135, towards the end of Chapter Four, “The Financialization of America: Electronic Speculation and Washington’s Loss of Control over the ‘Real Economy’” Don’t look now, but isn’t that the supposedly progressive think tank head, John Podesta, over at the Center for American Progress, pushing the value added tax, the VAT, a favorite form for a national “consumption tax?”

If there’s a danger in Phillip’s approach to our national problems, it’s that his emphasis on Washington’s arrogance and capture by vested interests can turn into momentum for political withdrawal as well as mobilization for change, especially as “stalemate” becomes the likeliest outcome of the current balance of forces. And would the nation’s newly anointed “forgotten men” – the small entrepreneurs – favor the more egalitarian outcomes and proposals which both John Gray and Phillips seem to arrive at? After being fed a steady diet from the Republican Right for 30 years, of less government and lower taxes, would they be likely to go for Phillips’ ten proposals – or rather instead a “doubling down” again on the Reagan-Bush tax transfers to the already well off? From the perspective of the summer of discontent, 2010, it seems more likely the nation is ready to try again the very formulas that put us in this situation, and it may take much greater economic suffering, post 2010 and 2012 elections, for the nation to finally change its course.

If indeed he has fallen silent for good, we will miss him and the legacy he has left of warnings and insights, works of depth and substance.

Keynes as the Philosopher You Don’t Know
Our last book of recommended reading on political economy (for this summer, at least) is one that speaks directly to the burning economic question of the moment, and the next few years: is it the size of the federal deficit and debt which are the problem, or the inadequate government spending and the shortfall in private demand/investment that has taken the nation, and Europe, to the brink of a double-dip recession – or worse, as Paul Krugman has indicated in his column from June 28th, “The Third Depression?” Once again, it is a citizen of Great Britain, Robert Skidelsky, Keynes’ biographer, and a member of the House of Lords, who has supplied the public with a bold assertion, “Why, Sixty Years After His Death, John Maynard Keynes is the Most Important Economic Thinker for America,” the statement on the front cover of his book Keynes, Return of the Master, published in 2009. This is the “popular,” if not populist version of Skidelsky’s acclaimed three volume biography of Keynes, an ultra brief version which nonetheless, reads like a long essay, not Cliff notes.

Yet, despite its brevity, this is a book not just about Keynes the economist, but also Keynes the philosopher, and the place of Keynesianism in the history of economic thought, relevant now to the “intellectual failure of economics,” which Skidelsky believes is “the root cause of the present crisis.” The organization of the book tells the story, with Part I covering the crisis and what the author believes went wrong, and the present dismal state of economics. Part Two is a brief history of “The Rise and Fall of Keynesian Economics,” which is perhaps most interesting for its discussion of the distortions which Keynes underwent at the hands of both liberals and conservatives in the U.S. in the period 1945-1975 and even later. That’s because the American Right, although it would deny it, has developed its own form of ersatz “Keynesianism”: tax cuts and increased defense spending. And Part III, “The Return of Keynes,” gives us, in keeping with what has become Skidelsky’s own take on economics, Keynes’ view of the “ethics of capitalism,” and a chapter on his politics, and finally, what he believes is most relevant for our situation today.

Keynes: Hijacked by the Left and the Right
Readers will be surprised to learn that Keynes was not an advocate for running continual budget deficits, and took seriously the given preoccupation of conservatives with the state of “business confidence.” Keynes was a remarkable thinker, defying neat categories, despite the deep varnish laid upon him as a man of the left and of massive government intervention – a view which most of the Right has far too simplistically promoted. Yet if conservative Bruce Bartlett tried to correct some of that in his August 14, 2009 piece in Forbes.com, “Keynes Was Really a Conservative,” at http://www.forbes.com/2009/08/13/john-maynard-keynes-conservative-opinio... , Skidelsky paints the far more nuanced picture of him: neither socialist nor uncritical capitalist, an atheist with deep ethical convictions and a “religious” sense about means and ends in life; an early free trader who became, in the 1930’s, a critic of the free trade world of 1914; a withering critic of the gold standard of the 1920’s and early 1930’s whose functionally equivalent idea was defeated by the U.S. at Bretton Woods in 1944 i.e., his attempt create a mechanism to deal with exactly the problem facing the international trading system today, the great imbalances generated by a glut of savings by trade surplus nations; a some-time speculator like George Soros, who none-the-less wrote to explain the difference between risk taking, a proper activity for capitalists, and uncertainty, the appreciation of what is unknowable and beyond the risk models of even the most advanced mathematical formulators: “Uncertainty pervades Keynes’ picture of economic life. It explains why people hold savings in liquid forms, why investment is volatile, and why the rate of interest doesn’t adjust saving and investment.”(Page 83.)

In his chapter on Keynes’ politics, Skidelsky portrays him steering a course through the ideological minefields of his – and our day – and, surprisingly, please witness the appearance of conservative economist Friedrich von Hayek, with whom Keynes corresponded and “shared epistemological positions” – but with whom he disagreed on the dangers of “planning:”

Keynes certainly did not believe that government knew, or could know, more than ‘society.’ But he did believe that it was in a position to take precautions against the consequences of uncertainty which private individuals or even informal social arrangements could not do. The ‘conventions’ which society erects to guard against uncertainty break down in moments of great stress. Hence a full-employment policy was not the thin end of the wedge to serfdom, but a prudent precaution against a situation developing which would destroy the values which he and Hayek jointly shared….We know enough to have a rational belief that ‘moderate planning’ will be an improvement on laissez-faire; we have no basis for saying that it will inevitably lead to serfdom or slavery further down the line. (Page 162.)

Keynes, Labor and the Crises of Capitalism
It is hard not to think about the similarities between the complex, nuanced Keynes and the political biography of his biographer, Lord Skidelsky, and to put them both in the context of the 1930’s, measured against our own times. Skidelsky has moved from the Labor Party to the now evaporated Social Democrats, and then to the Conservative Party in the early 1990’s, from whence he has departed to become a “cross bencher.” His essay, The Crisis of Capitalism: Keynes vs. Marx, from February of 2010, offers a strong clue to providing a compass heading for this migration, and the difference between the two eras, 60 years apart. It sounds like the 1970’s fiasco of Labor in Britain left a lasting impression, and found resonance in the life of Keynes: “Trade Unions, in Great Britain at least, threatened to become the prevailing power. Labor Government programmes in the early 1970’s envisaged an economy run by the government and the trade unions, with only a minor role for private business. Thatcherism was the political reaction to this.”

Impression indeed; there is no mention of Trade Unions, or Labor, in the Index of Keynes, Return of the Master. And Keynes, according Bartlett’s piece in Forbes, was very tough on the Trade Unions’ brand of Fabian Marxism. Yet if Keynes was not fond of the trade unions and Skidelsky himself thinks that they overstepped the limits of a mixed, yet still quite capitalist British society in the 1970’s, it is clear that he feels that in turn, “Globalization” has now carried the war against labor too far, just as John Grey does:

Globalization was the business response to the declining rate of profits which Marx predicted. It was seen as the master key to overall improvement in the position of the business class. It increased corporate profits, reduced prices of consumer goods, and made possible a huge influx of outside money into the western banking system. But, most important, it was used as a bludgeon to frighten workers and to emasculate their economic and political powers. (The Crisis of Capitalism: Keynes vs. Marx, at http://www.skidelskyr.com/site/article/the-crisis-of-capitalism-keynes-v... )

In Search of the ‘Harmonious Society’
It’s a glimpse into an economic world whose operating principles have eroded, if not consumed, the broader civic society in which it rests. That is what John Grey meant when he wrote that “Markets are made to serve man, not man the market.” Keynes saw that the capitalism of the 1930’s was going to destroy middle class society, and the working class as well, if more stabilizing and equitable arrangements were not made, and Skidelsky writes in a similar vein of capitalism’s troubles today, with adjustments for a less extreme situation – for now, at least. Yet the economics profession of our day, as in the 1920’s and 1930’s, has no broader vision of where it is going or what constitutes the good life, other than to urge that society continue to give the business world all the particulars it has been asking for since the mid-1970’s, once the emergency repairs and regulations of 2009-2010 have finished their stabilization task. On the next to the last page of Keynes, The Return of the Master, we are given a glimpse of the world that the great economist-philosopher was hoping for, “that of the ‘harmonious society.’” Social harmony will be built upon “full employment at home by means of investment and income redistribution…” which would “take the pressure off foreign trade, slow down the pace of globalization, and ease the social tensions arising from it. A Clearing Union for international payments would bring to an end global macroeconomic imbalances, automatically creating a more plural world.” (Pages 190-191.”

From the perspective of the summer of 2010, the “harmonious society,” has a cruel, sardonic edge to it, thanks to the state of American politics, which is not the way Keynes intended it. Instead, a “Society without solidarity,” might be closer to the reality of our situation. Far from having too much power, as British labor did in the 1970’s, American labor has seen its legislative priorities put in the freezer, if not deep-sixed. There is no “balance of forces” in society that can enact a comprehensive reform program to cure the economic troubles of our day, and despite increased conversation and agenda sharing at the international level, we are no where close to achieving Keynes’ “Clearing Union,” and a new Bretton Woods arrangement for the world’s dangerous and unstable international economy. Nations can’t agree on the shape of banking reform or even the propriety of a Financial Transactions Tax – which ought to be the lowest common denominators, given the catastrophe of the private financial casino and its creation of a good share of the public deficits here and in Europe. Today “Keynesianism” is waved about by the Right as if it were the equivalent of the bloody flag of full blown governmental socialism and “interventionism”, intervention of a scope that is only allowable for nation building far, far from home, like that undertaken by Paul Bremer in Iraq, in the fall of 2003 (speaking of social engineering).

In the U.S., there is no viable force on the left which might force the Obama centrists to go beyond their “foxhole Keynesianism,” and deal effectively with the human tragedies of unemployment and foreclosure. It is testimony to the power of old economic ideas, the neoliberalism of the Center and Right, that at a time when these twin failures are battering them in the short and medium term politics, they are still nearly paralyzed in the realm of effective policy responses. So is the Federal Reserve Chairman, who continues to jiggle the possibilities in his financial/monetary toolkit, promising to keep his options open, while it is slowly dawning on the rest of us that when he studied the New Deal, he completely left out the direct job creation history side of the story, being consumed, like the rest of the curve of the economics profession since the mid-1970’s, with the money supply, interest rates, quantitative easing and various other technical inducements to get the “animal spirits” of business revived. Everything but the direct job creation that would put money in the pockets of those who need it the most and who would spend it right away.

Yet the footsteps which Obama hears in his bad dreams come not from the left but from the Right, just as they did with Lyndon Johnson, Jimmy Carter, and Bill Clinton. If you doubt this just ask Van Jones or the more recently fired Agriculture official Shirley Sherrod.

We must now confess that at least part of our purpose in looking at the life and economics of Keynes and Skidelsky himself has an ulterior motive: by stressing their genuine moderation, we intend to shed further light upon the extremism with which the Right still largely views Keynes and all his works, despite Bruce Bartlett’s take on him. It has been said that next to the now departed Bolshevik Party, the world’s most intensely ideological movement is the Republican Right, one so intolerant that it can’t even find a good word to say about someone who helped save capitalism in the 1930’s, save it from fates far worse than the alleged character destroying and business confidence sapping Civilian Conservation Corps and the WPA of the New Deal. Political observers today like to point out that the Republicans in Congress are being extreme in a tactical sense by trying to deny the Obama administration any legislative victory for which the voters might prove grateful, or, even worse, their worst fear - politically loyal. But such a strategy is not all tactics; it is also ideologically driven, to deny the very efficacy of government itself, partly by driving the shape of legislation into thousands of pages of compromising permutations so complex, so murky and so shoved into future delivery dates pending regulatory renderings that the very fruits of legislative “victory” already have turned to mush in the minds of voters…It’s extreme, it’s destructive for the nation, but it is a clear anti-government ideology and it is working very well for the short run politics.

The Ideas that are brought to the “Seats at the Table”
As we were thinking about how to conclude our consideration of Keynes for our times, we were leaning towards a quote which would highlight the differences between him and the contemporary Right on matters of social and economic “balance” – whose voice gets heard and the weight given to the different voices, a “harmonious” resolution of which, we hope our readers will agree, is necessary if we are to restore some semblance of equality of representation to those who will eventually sit around the governing table. This is a step which logically precedes, in our minds at least, greater freedom of action in actually carrying out coherent public policies. Here in Montgomery County, Maryland, County Executive Ike Leggett promised, in his 2006 campaign, that everyone “would have a seat at the table.” But unfortunately, at the national level, and the international one too, the one represented by “globalization,” the powers of the private sector sit upon veritable thrones, while the various entities which stand for the greater public interest, or parts of it, whether non-profits or labor unions, sit tethered and teething in the equivalent of high chairs, and the old “forgotten man” from FDR’s 1932 speech, can scramble for scraps, thank you, from what falls to the floor. The degree to which these imbalances of power are reflected at the local and state levels needs its own posting; suffice it to say for now that the calamity which none of the state and local officials saw coming, the collapse of the private financial sector, has turned into a union bashing, pension shrinking indictment of profligate government, getting the cause and cure exactly up-side down, as James Galbraith’s testimony makes clear.

But we don’t want to carry this seating and weighting too far, because in the realm of ideas which the different parties bring to the table, we still see the dominance of neoliberalism, of the extreme current free market version of capitalism, which so shades the ideas which even the non-profit sector works from, that it can cancel out the effectiveness of what ought to be truly independent voices speaking up for the broader society. Thus in environmental matters, cap and trade became a mirror of the world of derivatives trading, Wall Street’s world, trying to mask the fact that in order to send a clear price signal on carbon emissions, the price would have to be raised, trying to pretend that it was not planning, but just a new market mechanism that would leave all the important decisions to the private sector after the markets were set up. Instead of clarifying matters, it made a potential muddle of a legislative proposal which mirrored in complexity and length exactly what has left the public indifferent if not downright hostile on health care and financial reform. Far from being truly independent voices capable of tipping the balance of power in the public’s interest at the negotiating table, the environmental movement proved to be just another political contortionist, fitting itself to the conservative bent of the dominant economic ideas of the day, yet ironically still being far from able to pass muster with the Right.

After all, most of the Right still rejects the environmental “movement’s” motives and goals as a threat to private property rights, laissez faire economics, and its ultimate value for society, what it calls “freedom,” which the Right believes stands solitary and frozen in meaning, just like its interpretation of the Constitution. (For a slightly more accurate portrayal of what the word has meant, as it changed over time in our history, please visit Eric Foner’s The Story of American Freedom, 1998). Environmental values can be fairly portrayed as significantly questioning, and qualifying, the pursuit of money and profits and the absolute freedom of action the entrepreneur demands, as the highest ends of life in society. For example, if the Mid-Atlantic states truly wanted to protect the Chesapeake Bay, they would write a regionally binding land-use plan which would change the “highest and best use of the land” from the real estate industry’s definition – which is conversion of the land to the use which brings the highest market sale price, whether that brings condos to the water’s edge or casinos to some future Bay version of Atlantic City, or chicken manure farms to the Bay’s most sensitive tributaries - to one that was consistent with the “restoration, protection and preservation” of the water quality of the Bay, and the habitats that sustain it. It’s been done before, as in the New Jersey Pinelands Act from the late 1970’s, but since “Smart Growth” has taken over in the age of Market Utopianism, nature in our most rural areas is pretty much at the mercy of “willing sellers” and the Nature Conservancy. Good luck, nature, under those arrangements.

Cannibalizing Hope: Conservative Public Choice Theory
But we don’t want to get too abstract in the summer heat here - let’s stay “grounded.” So why not visit with the veritable fount of folksy sayings and good old Texas wisdom, the Republican former Speaker of the House of Representatives, the “genial” Dick Armey, and see what he might have to say about the folks sitting around the public’s policy table, if not the table itself. Armey, who is an economist by training, now works for Freedom Works, (there it is again) a conservative non-profit, one which has been very active in organizing and supporting “grass roots” opposition to Obama. According to an early November, 2009 article in the NY Times Magazine (“Dick Armey is Back on the Attack,” by Michael Sokolove), Armey is also someone who is “an adherent of public choice theory.” Now that sounds pretty good, that there would be a theory on how the “public” makes its choices, what could be the harm in that? Unfortunately, this theory also turns out to be more than just a little disillusioning about the politicians who sit around the table and decide who else gets a seat, and what’s on the table itself. It seems as though someone who won a Nobel Prize in economics for work on it in 1986 – James M. Buchanan, of George Mason University “has described it as ‘politics without romance.’” The NY Times Magazine article author says that “Army told me ‘what public choice teaches is that despite their pretensions to altruism, politicians are just like the rest of us. They’re all in business with themselves.’” (At http://www.nytimes.com/2009/11/08/magazine/08Armey-t.html , page 5).

Amity Shlaes, the New Deal revisionist author, has a way with words and angles of attack, so it’s instructive to see how see how she used “public choice theory” to re-frame the role of government under FDR in an interview given shortly after her book The Forgotten Man was published. Speaking to Nick Gillespie in the January 2008 issue of Reason.com, Shlaes put it this way: “‘Very simply, public choice says that government is no better or worse than a business, it’s a competitor. Sometimes I use a crustacean image; the government is like a lobster. It will eat anything, it wants to survive, it will compete with anything, and it can be a cannibal.’” (at http://reason.com/archives/2007/12/18/remembering-the-forgotten-man

Well now Ms. Shlaes, with all due respect to your views, that description sounds worse than what a lot of businesses want to project about themselves; in fact, it sounds downright Darwinian, which is fitting, since the title of your book was taken from an essay by William Graham Sumner, as you have noted; what you didn’t note, however, in your book or the Reason interview, was that Sumner was America’s leading 19th century Social Darwinist. But you seem to have, nonetheless, conveyed the idea of, if not exactly a dog-eats-dog world, then a pretty nasty crustacean one as what we can expect from our governments. Perhaps someday conservative public choice theory will evolve to a truly efficient market approach, and save the costs of government entirely and have us presided over by a rotating council from the Business Roundtable, with all those congressional staffers replaced by interns from the Cato Institute and the Heritage Foundation.

Public Choice theory is also covered in Skidelsky’s book on Keynes, in Chapter Five, which asks whether the Keynesian Revolution was a success or failure. He gets to Public Choice Theory right after a heading for the New Classical Synthesis, which he earlier covered with brief, illuminating little portraits of the rational expectations hypothesis (REH), real business cycle theory (RBC) and the efficient financial market theory (EFMT), which “together…lie at the heart of contemporary economics.” We might also observe that together they add up to a world view that says markets can pretty much take care of themselves once up and running, so that government can put the idea of major interventions back on the shelf labeled the 1920’s, along with public jobs programs. Skidelsky says that public choice theory is actually a “theory of ‘government failure.” It shares with rational expectations a “methodology of modeling public policies as the solution to individual maximization problems.” That takes us back, way back, to the 18th century “inspiration of economics, which juxtaposed the efficiency of markets with the failures of government.” (Pages 110-111.)

It also deeply undercuts the idea that government is out to pursue and protect the “public interest,” because now it is headed by “politicians, bureaucrats and ‘rent-seeking’ lobbies.” We think that public choice theory overstates the case against the possibility of a neutral, much less positive, pursuit of the “public interest” by government. And the case against good government is made more plausible by downplaying and underestimating the aggressive pursuit of rent-seeking coming from the private sector, which, as some of the authors we have been citing over the years, like Karl Polanyi, acknowledge, can’t seem to live with the brutal policies that flow from its pure “free market” abstractions, and is therefore always at the government’s door seeking some form of special treatment, or “rent-seeking.” Framing the problem in this way makes it more about the Utopian aspects of capitalism, rather than government in the abstract, or more vividly, government by cannibalistic lobsters, and also helps explain why the Republican Right, which has such a distaste for the positive role of government, remains so anxious to capture its offices. Government thus is an important, if not the crucial arena for carrying out any party’s or cause’s ideological agenda - left, right or center.

But if readers will step back a second, and think about the presidency of FDR during the New Deal, they will have to grapple much more seriously with the idea of a government ably (yet far from perfectly) carrying out what it rightly or wrongly believes to be a fairly disinterested idea of the public interest. Ms. Shlaes struggles with this notion, and gives FDR some of this due we are arguing for, grudgingly, as well as giving some to the much maligned Hoover, but on the whole, the thrust of her book is to take away from progressives and liberals any hopes that what they were taught about the 1930’s is what actually happened. After all, she maintains, it’s just like the advocates of laissez faire had said: the private sector would have recovered faster, and better, on its own, than it did under all that experimenting and intervening. Having lost the chance to conduct this great experiment on unemployed Americans in the 1930’s, the American Right, it now looks likely, will have a chance to re-run it under better laboratory conditions in 2012. We can’t wait. And we know a certain former insect exterminator from Texas who will be happy to supply the Petri dishes.

When Government Worked: Rewriting the History of the New Deal
We do hope to fully review Ms. Shlaes book in forthcoming editions, but for now we do want to register something of interest for her notions about “public choice theory” and the type of people who enter government, and what they do when they get there. The brief, glancing references to Harry Hopkins in her book, one of the key players in FDR’s programs, and the one who perhaps best personifies the spirit of the New Deal, and its essentially honest pursuit of the public interest, leaves him a lifeless stage prop entirely out of cast, and out of focus. It’s 180 degrees from the Harry Hopkins presented in Nick Taylor’s American Made. We think it’s a significant distortion, and one related to the one-sided negativeness of “public choice theory” itself. For now, we’re more than happy to have readers pursue more about the life of Harry Hopkins and decide for themselves just what he accomplished, and what he stood for, this man whom Shlaes called an “old Republican progressive.”

Keynes, Capitalism and the Good Life
This strategy on the Right to deprive the American people of even the possibility of a neutral government serving the public interest is very important. It seems as if it is designed to take away, if not destroy, hope itself – a hope that it denies exists beyond that generated by the all powerful private marketplace. And that is why we are going to close with a couple of thoughts about a passage from Lord Skidelsky’s book, from Chapter 6, “Keynes and the Ethics of Capitalism.” It is an answer to the contemporary Right’s confusion of capitalism as an end, not a means, and its related problem of mistaking one 19th and 20th century interpretation of Christianity with a much older tradition – and understanding.

What if any ethical value, Keynes often asked, was to be attached to a life of ‘moneymaking and bridge’? Business life was at best only good as a means, but even as a means Keynes ranked it below public service, which at least was concerned with the public good. This was because business life overturned the correct hierarchy of values, teaching society to value ‘love of money’ above love of goodness. Keynes’s characterization – and condemnation – of capitalism as based on ‘love of money’ echoes the biblical statement ‘the love of money is the root of all evils’ (I Timothy 6:10). (Pages 141-142).

Now if Keynes were writing during the formal Social Gospel era in the United States, at the turn of the century, he might have let matters rest right there. But he wasn’t; he was writing, in 1930, what Skidelsky calls a “futuristic” essay, Economic Possibilities for Our Grandchildren, just at the time when the psychological insights of modern life were beginning to penetrate scholarship of all sorts. So that “love of money” from the Bible becomes “the engine of capitalism…driven by a neurosis which he called ‘love of money.’” Keynes was looking forward to the day when the compulsions of capitalism and its Protestant Ethic, would ease off, resting on the great abundance they had helped create: “With the economic problem solved, mankind would face its permanent problem, how to live ‘wisely, agreeably, and well,’ by which Keynes meant that people would be able to shed their pathological ‘purposefulness’ and ‘love of money’ and trade even higher incomes for more leisure and enjoyment of life.” (Page 144.)

Well… it’s 2010 now, and with the dominance of neoliberalism, we’re still living with the neuroses and the pathological purposefulness of capitalism - and how. The mechanisms of abundance are even more impressive today than they were in the 1920’s and 1930’s, yet the “wisely, agreeably and well” hopes sound entirely utopian, as pensions and savings evaporate and the concept of a career, and even that of a job, are now formally obsolete. But the need for incomes from the employment from those careers is looming larger than ever, in one of the greatest contradictions ever to face capitalism.

Meanwhile, over at Goldman Sachs, we can tell you how Lloyd Blankfein and his firm face the contradictions. Subjecting most of their employees to daunting work schedules and relentless personal evaluations, the idea is to make their millions by an early age, and then to pursue Keynes’ triad, mixing in charitable and governmental work amidst all that leisure. Although Blankfein called it doing God’s work, in some ways, one could also call it a parody of what Keynes meant, because in fact the Wall Street syndrome has contributed the added irony, and cruelty, of demolishing Keynes’ dreams for much of the rest of society.

The choices facing American society are becoming clearer and clearer. We are either going to work out our own good, modern version of social democracy leaning towards Keynes’ fondest hopes, or we are going to plunge into an new era of ugly Social Darwinism, one that will make the first one look enchanting.

Until the next posting, the very best to our readers,

Bill Neil
Rockville, MD
w.neil@att.net

Listening to the Mayors

Alan Jenkins — Tue, 15 Jun 2010 09:56:51 -0400

By and large, mayors are pragmatists. They've got snow to remove and potholes to fill, schools to run and crime to fight. Literally and figuratively, they must keep the trains running on time, or hear loudly and decisively from voters and constituents.

That pragmatic spirit was evident on Monday, when the U.S. Conference of Mayors passed a resolution condemning Arizona's anti-immigrant law and calling on the Federal government to quickly pass commonsense immigration reform. The resolution criticises the Arizona law as "unconstitutional and un-American," calls for its repeal, and opposes any copycat legislation in other parts of the country.

The mayors' criticism of the Arizona law is warranted, because the law encourages targeting of people, including citizens and lawful residents, based on the color of their skin and their appearance. It violates the basic human right to fair and equal treatment in law enforcement and our justice system. And in more practical terms, it will discourage people from reporting crimes or suspicious circumstances and divert law enforcement resources away from addressing serious crime.

The mayors' call for national immigration reform is equally important, and it reflects their pragmatic approach. The non-partisan Conference has for some time sought reform that includes: "Increased border security and enforcement; the protection of human and civil rights of both citizens and non-citizens being detained; more support for city and state governments which are disproportionately shouldering the costs of the current broken immigration system; the use of new technologies to match up foreign workers with jobs in this country that are going unfilled (guest worker program); [and] the elimination of current obstacles to citizenship that have resulted in 10-12 million undocumented residents living in the shadows."

The mayor's resolution is an act of pragmatic, non-partisan, and moral leadership that our country desperately needs right now. It's a call for workable solutions on immigration that uphold our nation's values and move us forward to gether. Let's hope that our leaders in Washington respond to that call.

Obama Immigration Policy: Record Arrests

Eric Lotke — Tue, 22 Sep 2009 07:55:01 -0400

New data just came in from the Transactional Records Access Clearinghouse (TRAC) at Syracuse University. In the first nine months of fiscal year 2009 the U.S. government reported 67,994 new immigration prosecutions, continuing and accelerating the surge from the Bush years. If this activity continues at the same pace, the annual total of prosecutions will be 90,659 for this fiscal year, up 14.1 percent from last year.

Everyone agrees there is an immigration problem in America. But accelerating arrests doesn’t look much like a solution. We’re still waiting for change.

Reality Check: Immigrants and Health Care

Immigration Policy Center — Wed, 12 Aug 2009 15:18:50 -0400

Washington D.C. - As the current debate on health care rages in town halls across the nation, immigration is being used as a way to jam a stick into the wheels of impending reform. Some are scapegoating immigrants as a way to thwart progress on the issue and are arguing that even legal immigrants be restricted from our health system. Linking these two issues does nothing to advance necessary reforms to either health care or immigration. The U.S. can do both, but public debate and discussion must be based on facts, not myths and misinformation.

The U.S. is not spending "too much" on health care for immigrants.
• A July 2009 article in the American Journal of Public Health found that insured immigrants had much lower medical expenses than insured U.S.-born citizens. Insured immigrants' per-person medical expenditures were 1/2 to 2/3 less than the U.S.-born with similar characteristics.
• Recent immigrants constituted 5% of the nonelderly adult population, but were responsible for 2% of adults' total health care costs, making their share disproportionately low.

The vast majority of people in America who don't have health insurance are U.S. citizens.
• The majority of people who do not have insurance are U.S. citizens. Noncitizens comprise a relatively small portion of the uninsured population. Four out of five people in America who have no insurance are U.S. citizens. U.S. citizens make up the majority of the uninsured (78%), while legal and undocumented immigrants account for 22% of the nonelderly uninsured.
• Furthermore, U.S. citizens account for most of the growth in the number of uninsured individuals between 2000 and 2006. Citizens made up approximately 80% of the growth in the number of uninsured persons in America, while noncitizens accounted for approximately 20% of the growth.
• The UCLA Center for Health Policy Research found that in 2005 undocumented immigrants made up only a small share of California's uninsured population. Nearly four in five of California's uninsured adults and children were citizens and legal immigrants.

Contrary to popular belief, noncitizens are significantly less likely to use emergency room services than U.S. citizens.
• According to the non-partisan Kaiser Commission, noncitizens have poorer access to care and receive less primary health care than citizens, but they are less likely than citizens to use the emergency room. In 2006, 20% of U.S.-citizen adults and 22% of U.S.-citizen children had visited the emergency room within the past year. In contrast, 13% of noncitizen adults and 12% of noncitizen children had used emergency room care. Despite the myths, immigrants use less health care, including less emergency room care, compared to U.S. citizens.
• A 2006 study published in Health Affairs found that communities with high rates of emergency room usage tend to have relatively small noncitizen populations. Cities with large immigrant populations such as Miami-Dade County, Florida and Phoenix, Arizona have much lower rates of emergency room use than areas with small immigrant populations such as Cleveland.

For more information on immigrants and health care, see:

• IPC Fact Sheet: Sharing the Costs, Sharing the Benefits: Inclusion is the Best Medicine
• IPC Blog Post: Including Immigrants in Health Care Reform Makes Economic Sense

The Next Fight: Immigration Reform

Sara Robinson — Thu, 04 Jun 2009 15:06:09 -0400

Republicans have been running on immigration as a signature issue for the past several elections, so it's ironic that progressives are the ones with the most to gain from solving the immigration problem. But before we can do that, we need to understand—and agree—on what the problems are, and what can and should be done.

That was the conclusion drawn by the four speakers at the "The Politics of Immigration: Workers, Justice, and Immigration Reform" panel at America's Future Now! on Tuesday afternoon.

Moderator Gabe Gonzales of the Center for Community Change tipped his hat to the GOP for their role in galvanizing the Latino vote in recent years. He noted that the pro-immigrant demonstrations in 2006 brought over three million people out into the streets. "The Republicans have done something that hasn't happened in 30 years, " he reflected. "When they started making generalized attacks on Latino immigrants, everybody came together in self-defense. When this panel is over, I'm going to take up a collection for a statue of Pete Wilson and James Sensenbrenner -- they're the Number One and Number Two Latino organizers in the country."

Still, it's not going to be easy, especially as long as progressives themselves remain divided on the issue of immigration.

VIDEO

Watch the June 2 immigration reform panel discussion at the America's Future Now! conference.

The Politics of Immigration at America's Future Now! from AmericasFuture on Vimeo.

Angelica Salas of the Coalition for Humane Immigrant Rights of Los Angeles opened the discussion by describing the specific problems immigrants face in dealing with the US Government. Strikingly, an estimated 40 percent of undocumented immigrants do have an application for legal status pending. They're in the system, and following the law; but processing takes so long (upwards of a decade in many cases) and the system is so chaotic that their cases simply haven't been resolved.

Others have been through the process, and been denied—often for purely bureaucratic reasons. A 1996 overhaul in immigration law penalized people who waited too long after their arrival to start the application process. If you wait over six months, you can't file an application for three years; and if you wait a year, you need to wait ten years to apply. In effect, this rule means that these people can't apply for legal status at all.

And while they're waiting, these immigrants have no protection against employer abuse, discrimination, or exploitation. Since they're forced to live in the shadows, their ability to fully integrate into the mainstream of American culture is compromised, too. Immigrant parents with American-born children can be deported in an instant, forced to leave their children behind. And, Salas makes clear, as long as we tolerate this situation, these immigrants will be a perfect right-wing scapegoat that can be blamed for everything from a decaying health care system to falling wages to labor issues. Having these immigrants in our economy gives conservatives a too-perfect excuse for their failure to address a great many issues.

Empowering these immigrants can also be a major win for progressives as a movement. "Immigration will matter as long as labor issues matter," said Eliseo Medina of SEIU, which organizes more immigrant workers than any other union in the country. He stressed that we cannot solve one issue without also addressing the other -- and the way we solve both has serious implications for how we address our larger economic problems as well.

Even before the recession, said Eliseo, we were struggling with huge numbers of people without health care, growing income inequality, the erosion of pension plans, a shrinking middle class, and an increasing disregard for labor laws that drained away the size and political clout of unions. But in attacking Latino immigrants, he noted, the right wing has awakened a giant. They underestimated the number of Latino-American citizens, citizens who are now unified and voting in numbers never seen before.

"They've learned what it is to participate and win," said Medina. "And they're going to be a force going forward." He pointed out that about two-thirds of Latino voters voted for Obama. Reforming immigration will put 12 million currently undocumented people on the path to citizenship, which will further expand the coalition of progressive voters.

"Will we win?" asked Ali Noorani of the National Immigration Forum. "Yes." Noorani pointed out that last year, 20 out of 25 House races in swing states -- and five swing state Senate races -- were won by candidates who stood for comprehensive immigration reform. In North Carolina -- not exactly a progressive stronghold -- Liddy Dole spent half her war chest on anti-immigrant ads...and lost anyway.

Noorani noted that the right wing has no real coherent answers to the problem of immigration. They're mostly interested in beefing up Immigration and Customs Enforcement (ICE), and deporting immigrants and their families. Real reform involves a much broader solution that brings the immigration system back under control; restores stability and responsibility; adds structure to the system; makes application for legal status mandatory; reunifies families; gives immigrants access to due process and the courts; and builds an enforcement system that's efficient, effective, and humane both at the border and in the interior. And it needs to create a pathway that allows immigrants to integrate, and succeed.

"This is not the silver bullet to the economic crisis, but it's a critical part of it," Noorani said. Undocumented workers are a "trap door in the wage floor," exploited by crooked employers. When we let immigrants slide through that door, we're also leaving it open for those same crooked employers to exploit African-American workers, then white workers. "We close that trap door, and everybody can compete for a job on a level playing field, for a living wage."

And, said Noorani, this fight begins right now. Next Monday, President Obama is convening Congressional leaders to start the push for an immigration reform bill, which he wants to get passed this year. The goal is to get 279 votes in the House, and 60 in the Senate. The fight will continue through the summer and fall, so this is the moment our representatives really need to hear from us.

What will that fix look like? Noorani offered three hard criteria for any successful bill. First, it must create a pathway for quick legalization of existing undocumented workers, so they can stop living underground and be counted. Second, it has to continue America's tradition of family reunification. Point systems encourage solitary immigrants, who arrive without any community or personal support infrastructure. When families arrive together and join up into immigrant communities, they're far more successful, and ultimately assimilate more smoothly. Third, it needs to be viable over the long run: if it doesn't allow us to process future immigrants in a sane, reasonable, timely way, we're going to keep having this conversation over and over in the future.

We also need to oppose any proposal to eliminate the Constitutional guarantee of birthright citizenship; recognize border-wall proposals as the boondoggles and gimmicks that they are; and reject any bill that makes undocumented workers into instant felons—a move that would drive them even further underground.

Ray Marshall, who was Jimmy Carter's labor secretary and is now teaching at the University of Texas, concluded the panel with a positive vision what the world could look like if reform succeed. He sees immigration reform as an integral part of a larger shared prosperity, because our immigrants would be fully empowered to succeed and contribute to America's culture and economy. And it's the necessary first step to improving protections for native-born American workers as well.

But first, Marshall continued, we need to convince the other side that maintaining the status quo is no longer an option—and that if they oppose it, they will be overridden in Congress. "We will have more immigrants in five years. The question is: on what terms, and how do we use the immigration process to support our shared prosperity agenda? We need a system that's fair, transparent, and in the best interest of the country."

Furthermore, said Marshall, we need to think globally. Five or ten years on, we might include Canada and Mexico in this "shared prosperity agenda," harmonizing the labor and immigration laws of all three countries in ways that discourage immigration from Mexico. "And then the world would be talking about the North American miracle, about how shared prosperity set a new standard of living for the entire hemisphere."

As the panel ended, the panelists and audience reflected on how much more useful it is for progressives to organize around ideas and goals, instead of cultural identities. Salas talked passionately about the importance of finding strength in your own identity -- but then reaching out beyond that to join with others to create a progressive vision we can all share. We all want the same things for ourselves and our children -- but because our issues are all so deeply interwined, we can only get those things by working together.

Supporters of immigration reform are encouraged to text 69866 justice to sign up for updates from the immigration action network.

A New Day for America, But Not for Immigrants?

Dennis Chin — Tue, 20 Jan 2009 17:07:46 -0500

There’s a buzz in the air in Washington, DC.

The inaugural ceremony is over and I can still feel the energy of millions of folks from across the country walking the streets, filled with the excitement of what’s to come in the next four years.

Hope’s in the air and I’m starting to feel it too.

President Obama ran on a promise of change that reminded us of the power of everyday people working together towards a better future. He tapped into the nation’s hopes and dreams to help us imagine a nation free of the last 8 year’s policies of division and fear.

This moment marks a new day for America. But I wonder if this moment rings true for everybody.

Franklin D. Roosevelt once talked about the Four Freedoms that all humans around the world should enjoy. One of these freedoms is freedom from fear. If we are to value his words and the message of hope and community that President Obama espoused during his Presidential campaign, then perhaps it’s time for us to take a deep look at the state of immigration in this nation.

For many of immigrants, the last 8 years have been marked by scapegoating, hate, and fear. I remember hearing stories of immigrant mothers sending their children to school with emergency information in case they were caught by ICE authorities and deported. I read countless stories of immigrant workers that were exploited by their employers. I remember the stories of immigrant detainees that were allowed to die in imprisonment.

Immigrant communities have always been a part of our nation. And they have played a large part in Obama’s path to the presidency. If Obama is to realize the promise of hope and change in this country and if he is to fight for the right for all communities to live free from fear, then let's call on him to work to transform our immigration system so that workers don’t fear raids, families stay together, and no one lives in the shadows.

Tomorrow morning, on January 21st, the Fair Immigration Reform Movement, a project of the Center for Community Change, will be hosting a day of action to celebrate A New Day For America and a new hope for immigration reform. We are asking President Obama to fix our country’s broken immigration system with a moratorium on the raids and comprehensive immigration reform. I encourage you to join me in this march.

Visit http://www.anewdayforimmigration.org for more information.

Petur Williams

Petur Williams — Fri, 16 Jan 2009 17:22:29 -0500

Born in Iceland, grew up in Colorado, went to school in Indiana and D.C., and
worked as a consultant and practiced law, and married a Dutch American stewardess
whose airline let me fly for free. Our children are a 24 year old man and a 22 year old woman
now, and we all share houses in Colorado and Maui and Holland and Mexico and D.C., and I
read, write, ski and dive a lot, when I am not working.

Country Legend Tom Russell Predicts The Future

Bill Scher — Mon, 11 Aug 2008 13:13:56 -0400

Country legend Tom Russell, known for being one of the pioneers of Americana music, last year responded to the anti-immigrant frenzy with a brilliant song, "Who's Gonna Build Your Wall?"

I've got 800 miles of open border - right outside my door.
There's Minutemen in little pickup trucks who've declared their own damn war.

Now the government wants to build a barrier like old Berlin, 8 feet tall.
But if Uncle Sam sends the illegals home, who's gonna build the wall?

Tom, how right you were.

Blue Texan's latest Firedoglake post sums it up: "BushCo’s Border Fence To Keep Out Illegals Being Built By Illegals."

The Austin American-Statesman reports on a planned 70-mile wall in the Rio Grande Valley:

Asked whether a border wall could be built on deadline without illegal workers, [Perry] Vaughan, with the general contractors group, told the Brownsville Herald in June: "It's probably borderline impossible to be honest with you."

The remarks were widely circulated on the Internet and picked up by other news organizations. Some in cyberspace said they don't care who builds a border wall.

"I just want the damn fence built. ... I'll let the Libs and the Intellectuals sit around and worry about irony," one poster wrote on a conservative Web site.

"I was simply acknowledging that in the construction industry, a pretty significant percentage of workers are obviously undocumented," Vaughan told the American-Statesman.

Although federal law prohibits employers from knowingly hiring illegal workers, an estimated 9 percent of Texas' workforce is unauthorized; 5 percent is nationally. Many employers and business and trade groups emphasize that they don't condone immigration-related fraud but that they can't vouch for the documents their workers present.

This is merely more evidence of a complete breakdown in our economic, trade and immigration system.

Unfair trade ship American jobs abroad to chase cheap labor. Reckless industrialization disrupts local agricultural economies south of our border. Those who don't get factory work leave home, cross the border illegally so they can be exploited farther away from their home. Workers everyone lose.

Instead of helping workers, conservative politicians posture about cracking down on immigrants and building border walls, while looking the other way when it comes to employer behavior. (The Bush Administration penalized a mere 17 employers for illegally hiring unauthorized workers.)

And that means you can't build a border wall to keep out illegal immigrants, without illegal immigrants.