Resurrecting Democracy

Inequality in the Trump Era

            Robert A. Levine   3-15-17

Inequality is inherent in the capitalist system, where those who are smarter or were born into the right family or work harder or take more risks can accumulate wealth and enjoy its benefits. This seems fair and most people accept that individuals who have greater responsibility or perform at higher levels or are more valuable to society should receive more compensation than their peers. Yet there are limits to how much inequality is reasonable in any society. This is particularly so if some of the acquisition of wealth is perceived to have been accomplished in an inappropriate, unethical, or immoral fashion, or due to luck.

Those who “make it” should be cognizant of those who do not, and be as generous and helpful as possible towards those who were not as ‘lucky.’ The wealthy tend to be more politically active in most countries than the working and middle classes, and fight to keep taxes low, perhaps contributing less than their fair share to maintain a nurturing environment for all citizens. They should fight instead to advance their nation and its population, and to provide the maximum opportunities for others to enjoy success.

An important consideration in reducing inequality is how much generational conveyance of wealth should be and can be curbed. If this is not addressed, an escalating percentage of the nation’s (and the world’s) assets will be possessed by a smaller number of families, which can be passed on indefinitely and employed to amass greater power. For democratic societies to flourish, equality of opportunity and meritocracy must be maintained, rather than control of the state and its institutions by inherited wealth.

As Thomas Piketty wrote- “no matter how justified inequalities of wealth may be initially, fortunes can grow and perpetuate themselves beyond all reasonable limits and beyond any possible rational justification in terms of social utility.” In the last quarter of the 20^th century and the decades afterwards, inequality has soared within democratic societies that have followed neoliberal policies. Neoliberalism as an abstract ideal may read well on paper, but the power of the free market has to be balanced by rules and regulations protecting the poor and middle-classes and allow them to lead decent lives.

Over the last half-century, with marginal tax rates lowered, the magnitude of difference between rich and poor has become greater than ever. Financial rewards from the performance of the American economy have not been dispersed through every level of society. The most affluent have benefited excessively, with little in the way of higher earnings filtering down to the middle- and lower-income strata.

Interestingly, Americans have no concept of the degree of inequality in their society, believing there is a more equitable distribution of wealth than there actually is. A scientific study several years ago showed that Americans thought the top quintile owned 59 percent of the wealth when it was actually more than 84 percent and believed the bottom two quintiles owned 9 percent of the wealth when it was actually 0.3 percent. The Walton family alone had more wealth than 42 percent of American families. In spite of these statistics, the American dream remains alive: that intelligence and effort can result in upward mobility and people can reach the top through hard work.

 

The continued growth of inequality has accelerated since the recovery from the recession of 2007-2008. Globalization and the loss of well-paying manufacturing jobs through automation have contributed greatly. As noted in the Harvard Business Review, the huge rise in economic inequality has been the result of technological changes and political decisions including financial market deregulation, free trade, tax code changes, and various other policy choices.

Another factor often overlooked in inequality has been assortive mating- the tendency for successful men and women to marry one another. Lawyers are more likely to marry other lawyers or other high-income professionals, as are physicians, business executives, and so forth. Thus, these families earn more and greater wealth is concentrated in their hands.

In the United States, the ultra-rich 0.01% of the populace was reported to have 11.1% of the nation’s wealth in 2014, with the top 1% having 39.8%, an astounding $32.6 trillion. These statistics do not consider assets in offshore accounts which would skew the percentages even further. The upper 1 percent earns nearly a quarter of the nation’s income annually. The richest 0.01% has quadrupled their share of America’s wealth since 1980, a time when they were already quite affluent. To a major degree, government policy which voters have allowed is responsible for the affluent being able to accumulate this immensely unequal share of assets, while the middle class stagnated financially and poverty appears to be intractable. A number of analysts believe income and wealth inequality in the U.S. is greater than in any nation in the developed world. Economist and Nobel Prize winner Joseph Stiglitz has said that “America’s inequality distorts our society in every conceivable way,” with globalization and technological advances designed to benefit the rich.

Stiglitz also believes that the degree of inequality in America has eroded trust in its institutions. And “trust is what makes contracts, plans and every day transactions possible; it facilitates the democratic process, from voting to law creation, and is necessary for social stability. It is essential for our lives. It is trust more than money that makes the world go round.” As inequality grows, the bonds of society are weakened, with citizens losing faith in a system “that’s seems inexorably stacked against them.” Stiglitz argues that the only way that trust will return is for government and its agencies to pass strong rules and regulations mandating proper behavior, with enforcement in the hands of tough and incorruptible regulators.

Many of the ultra-rich have achieved the status nobility were accorded in feudal societies, living in castles with servants and bodyguards, their every desire gratified. Thomas Piketty’s book Capital in the 21^st Century noted- “When the rate of return on capital exceeds the rate of growth of output and income, as it did in the 19^th century and seems quite likely to do again in the 21^st, capitalism generates arbitrary and unsustainable inequalities that radically undermine the meritocratic values on which democratic societies are based. There are nevertheless ways democracy can regain control over capitalism and insure that the general interest takes precedence over private interests, while preserving economic openness and avoiding protectionist and nationalist reactions.”

Thus, one of the major objectives of democratic societies must be discovering how to lessen the concentration of wealth in only a few hands with continuous generational transfer, and achieving this end in a rational fashion. However, the likelihood of this occurring under the stewardship of President Trump and a Republican Congress is virtually nil. Whether it will ever happen depends on whether voters educate themselves as to their own interests and pressure their elected officials to truly work for them.

Resurrecting Democracy

www.robertlevinebooks.com

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The Consummate Con

            Robert A. Levine    8-1-16

Conning people has been an integral part of Donald Trump’s life since he was a young man. Lying or exaggerating whenever it was useful is second nature for him, to make him look better than he actually is. And deceiving individuals was automatic, to make it seem as if he was doing something special for them, when he was actually taking advantage of them. Everything he did was to increase his wealth or for self-aggrandizement, to bolster his own ego which must have been crimped in his childhood. Trump the man has a lousy self-image and has to constantly remind everyone how terrific he is, how rich and how smart he is.

Trump has always done anything necessary to beat the system. By hook or by crook, it has always been critical that he best everyone he’s ever dealt with, or at least make it seem that way. No problem using unethical, questionably legal, or even illegal methods, as long as he came out on top. He couldn’t stand having another person able to say that he or she had gotten the better of him; that he had been a loser. For him, that’s the worst epithet that can be employed to describe a person. (And Trump utilizes it liberally for anyone who opposes or criticizes him.)

Trump has also used women to reinforce his self-image, conning them into believing that he liked them before moving on to the next one when his attention span faltered. (Three marriages and how many failed relationships?) His modus operandi also included using women as arm candy, so other men would envy him and he would be held in greater esteem. Fidelity was never an issue for him. Self-gratification and self-aggrandizement were more important.

And he learned at an early age to avoid responsibility for his actions. When younger, his father had been around to get him out of jams, with money or connections. While the Vietnam War had raged, brave Donald had gotten multiple deferments for education. Then when his time had come to go into the service, he had gotten off the hook when a doctor had declared that The Donald had a bone spur on his heel and wouldn’t be able to tolerate the rigors of Army life. (Give me a break! How much do you think that one cost his daddy?) Yes, The Donald who claims that he loves veterans is actually a draft dodger; a coward unwilling to fight for his country. He was happy to leave the job of protecting democracy to all the poor slobs unable to get out of the service; who didn’t have rich fathers to send them to school and manipulate the system to have them evade the draft. And it’s Trump who says that the system is rigged. He’s right. But it is and has been rigged for guys like him. Money and connections.

And the poor slobs who did the fighting in Korea, Vietnam, and America’s more recent wars, are the ones now supporting Trump for president, believing his con that he’s going to do something for them. They’ve been deceived by the lies he’s told them, promising jobs and the industries he’s going to bring back to America, how he’s going to rid America of illegal immigrants and build a wall across the border with Mexico to keep immigrants out. But ask him about the Trump brand suits, ties, shirts and hats that are manufactured abroad, about the undocumented immigrants he’s used on his construction jobs, about the small businessmen he refused to pay for the work they did.

The Donald’s history has been one of constantly scamming gullible people to steal money. There was “Trump University” which scammed students for tens of thousands of dollars they couldn’t afford, getting them to sign up for real estate courses that were going to make them rich by learning Trump’s secrets. Instead, Trump took their money and left them with nothing in return but debt. And there was the “Trump Institute” that did more of the same. Trump’s businesses included his ownership of the New Jersey Generals Football Team that went belly-up and made Trump a loser. And Trump Airlines with the Trump Shuttle was another losing venture for him.

But even worse were his casinos in Atlantic City that went bankrupt, costing investors millions of dollars, employees their jobs, and contractors, sub-contractors, and small businessmen the payments they were owed. The Donald, however, claims that he walked away from these bankruptcies having made plenty of money. Too bad for the suckers who trusted and believed in him.

Now he’s asking the whole country to trust and believe in him. He says that he’s going to make America great again, protect it from terrorism, and reduce crime (even though crime is already at an all-time low). Trump says that he knows more about ISIS than the generals, though it’s not clear where he’s gotten his information or what his plan is to eliminate ISIS. Maybe Putin told him. (Trump’s called General Allen, a four star Marine Corps general a loser because he’s supporting Hillary.)  Trump says he gets his foreign policy and military advice mainly from himself, because he’s so smart.

Though Trump has made lots of promises, he hasn’t told us how he is going to get all of these things done. He’s conned people into believing and trusting him in the past and they were all hurt by him. Just trust him and believe in him. He knows what he’s doing and is the only one who can make America great again. Really! Should anyone trust or believe in him given his history. To me, it sounds like the consummate con.

Resurrecting Democracy

www.robertlevinebooks.com

Photo by Shutterstock

Inequality- Any Hope For Change?

            Robert A. Levine       5-18-16 

In January 2016, Oxfam reported a major increase in global inequality, with just sixty-two people owning as much wealth as 3.5 billion people in the lower half of the world’s income scale. Inequality is inherent in capitalism, where those who are smarter or were born into the right family or work harder or take more risks can accumulate wealth and enjoy its benefits. Most people accept that individuals who have greater responsibility or perform at higher levels or are more valuable to society should receive more compensation than their peers. Yet there are limits to how much inequality is acceptable in any society. This is particularly so if some of the acquisition of wealth is perceived to have been accomplished in an inappropriate or immoral fashion. Some of the most affluent may also showcase their money in ways that provoke anger along with envy in those less fortunate. They may also use their money to buy political power, corrupting politicians and elected officials.

An important consideration in reducing inequality is how to curb generational conveyance of wealth. If this is not addressed, an increasing concentration of a nation’s (and the world’s) assets will be possessed by a smaller number of families, which can be passed on indefinitely and employed to amass power, either directly or indirectly. For democratic societies to survive and flourish, equality of opportunity and meritocracy must be maintained, rather than control of the state and its institutions by inherited wealth.

Over the last quarter-century, with marginal tax rates lowered, financial rewards from the performance of the American economy have gone disproportionately to the most affluent, while little has filtered down to the middle- and lower-income strata. The Walton family alone had more wealth than 42 percent of American families. Still, the American dream remains ingrained in society; that intelligence and individual effort can result in upward mobility and people can reach the top through hard work.

The continued growth of inequality has only accelerated since the recovery from the recession of 2007-2008. To some degree, uninformed citizens voting against their own interests played a role. Globalization, computerization, and the loss of well-paying manufacturing jobs have also contributed. As noted in the Harvard Business Review, the huge rise in economic inequality has been the result of technological changes and political decisions including financial market reregulation, free trade, tax code changes, and various other policy choices.

Another factor often overlooked in burgeoning inequality has been assortive mating- the tendency for successful men and women to marry one another. Lawyers are more likely to marry other lawyers or other high-income professionals, as are physicians, business executives, and so forth. Thus, these families earn more and greater wealth is concentrated in their hands.

Currently, a small number of individuals control inordinate amounts of wealth in most democracies. In the United States, the ultra-rich 0.01% of the populace was reported to have 11.1% of the nation’s wealth in 2014, with the top 1% having 39.8% of the wealth, an astounding $32.6 trillion. These statistics do not consider assets held in offshore accounts which would skew the percentages even further. The upper 1 percent earns nearly a quarter of the nation’s income annually.

The richest 0.01% has quadrupled their share of America’s wealth since 1980, a time when they were already quite affluent. In fact, according to Forbes, the richest four hundred Americans alone were worth an unbelievable $2.29 trillion in 2013, increased by $270 billion from the previous year. To a major degree, government policy which voters have allowed has been responsible for the affluent being able to accumulate this immensely unequal share of assets, while the middle class has stagnated financially and poverty appears to be intractable. Income inequality in the U.S. is greater than in any other nation in the developed world by a large percentage. Economist and Nobel Prize winner Joseph Stiglitz has said that “America’s inequality distorts our society in every conceivable way.”

And wealth creates wealth. The more disposable income and excess capital an individual possesses, the more extra money he or she can accrue through investments. Then, that additional surplus money can be reinvested along with the original sums, creating greater and greater wealth for that person and his or her family. This is not necessarily bad for society, creating more businesses, jobs and so forth. But limits must somehow be set. To a certain degree in democracies, many of the ultra-rich have achieved the same status nobility were accorded in feudal societies, living in castles with servants and bodyguards, their every desire gratified.

Thomas Piketty in his book Capital in the 21^st Century noted- “When the rate of return on capital exceeds the rate of growth of output and income, as it did in the 19^th century and seems quite likely to do again in the 21^st, capitalism generates arbitrary and unsustainable inequalities that radically undermine the meritocratic values on which democratic societies are based. There are nevertheless ways democracy can regain control over capitalism and insure that the general interest takes precedence over private interests, while preserving economic openness and avoiding protectionist and nationalist reactions.” Thus, one of the major objectives of democratic societies must be achieving in a rational fashion the lessening of the concentration of wealth in only a few hands.

In 2005, the most affluent 300,000 Americans made as much as the bottom 150 million. The income gap was almost double that existing in 1980. The growth in income for top corporate executives and the excessive compensation going to investment bankers and financiers have been responsible for much of the inequality. A chief executive at one of the leading one hundred corporations in America in 1977 made about fifty times the pay of its average worker. Thirty years later, these CEOs made about 1100 times the wages of an average employee.

Though the financial industry, the energy sector, and high-tech companies, had the largest annual payouts for their officers, virtually all corporations have been rewarding their major executives with increasingly high salaries. But the financial industry provided the highest salaries by far. Wall Street pay broke a record in both 2009 and 2010 in spite of the damage these firms had done to the economy and the need for government bailouts. Financial firms in 1984 generated about one-seventh of the profits of all businesses in the US. By 2009, it was more than a quarter and had been as high as a third at the height of the boom in 2006.

While compensation for CEOs was once supposed to be tied to company performance, this idea has been mostly abandoned. In good times and bad times, executive compensation keeps rising, even while many of these corporations slash pensions and health care benefits, lay off workers, and sometimes flirt with bankruptcy. 

Though there have always been differences in wealth and standards of living among US citizens, those who struggled were sustained with the belief that America was a meritocracy and that anyone could rise to the top. Whether this perception was valid does not matter, as it infused Americans with optimism about their ability to transcend origins and status to realize whatever their dreams might be. This is in the process of changing (aside from high-tech savants) as an aristocracy of wealth is developing, its members having the power and ability to shape the world to fit their needs and expectations. Whether a more equal distribution of wealth can ever be attained depends on the voters and who they choose to represent them.          

Resurrecting Democracy

www.robertlevinebooks.com

The Anti-Obama Is Not the Answer

            Robert A. Levine   3-15-16

  Many Americans blame President Obama for everything that has gone wrong in the country and see Donald Trump as the anti-Obama who can right the American ship. While Obama has made his share of mistakes, he is mercilessly blamed for conditions beyond his control, or criticized for situations that are blatantly false. However, the citizens condemning Obama may have no idea how the government works, the politics behind certain situations, or the real state of the economy. For example, a Rasmussen poll less than two months prior to the 2014 elections revealed that only 63 percent of voters were aware which parties controlled the Senate and the House. Furthermore, a month before the 2014 election, with the economy a critical concern, 27% of Americans thought the unemployment rate was 9% and nearly 20% were convinced it was 12%, when the correct number was 5.9%. As another sign of voter obliviousness, a Public Policy Poll in 2013 revealed that nearly a third of Republicans in Louisiana blamed President Obama for the federal government’s inept handling of Hurricane Katrina. Of course, Obama was not president until three years after Katrina’s devastation, with Bush occupying the White House at the time of the hurricane. There are countless other illustrations that show citizens to be uninformed about political facts or simply disregarding them if contrary to their beliefs.

 Even though the unemployment rate is now 4.9 percent, a major issue is the tepid recovery from the last recession and the lack of decent blue collar jobs. This is one of the prime reasons uneducated white men are backing Donald Trump who has promised to return these jobs to America. Unfortunately, they are not coming back no matter what Donald Trump says or does. Actually, there are plenty of good jobs available right now but they require higher education and the ability to work with computers and new technology. Education is the key to getting a job, as computers and robots will be doing most of the repetitive factory work. Recently, it has also been noted that mortality rates are elevated for poor, uneducated white men in America, with alcoholism, drug abuse and suicide the main causes. Lack of work and self-esteem may be considered underlying factors.

 Donald Trump’s campaign for president has been able to gather millions of followers who are angry and disappointed and anxious for change. While Trump’s ascendancy in the nether world of the Republican Party may have struck the establishment and political pundits as improbable, in many aspects it is a rational response to Obama’s residency in the White House. In almost every important way, Trump is the antithesis of Obama in his actions and beliefs, and a perfect candidate for those Americans who despise the president.

Obama is a sophisticated, soft-spoken intellectual whose decisions are made after careful deliberation, weighing the possible ramifications. He does not act impetuously and often does not seem dynamic or enthusiastic about his actions. Though he would like to aid the downtrodden, particularly African-Americans and Latinos, he pushes equality and equal rights for all Americans. The Affordable Care Act (ACA) that provides medical coverage for millions of the uninsured is probably his signature achievement. He would like to see a living minimum wage for workers, better unemployment insurance, and stronger unions. Thus far, his two appointments to the Supreme Court have been unfailingly liberal, both of them women. The Republican dominated Senate refuses to allow him a third appointment though the death of Justice Scalia has opened a vacancy.

Reluctant to commit additional American military forces to adventures abroad, Obama does not want to entangle America in major foreign responsibilities which could get out of hand. A gradualist rather than an immediate responder to challenging situations in distant lands, he favors incremental steps to resolve problems instead of jumping in head first. Indeed, in most circumstances he would rather cajole than threaten, using the nation’s economic power if possible instead of its military forces to bring about the desired results. Many citizens who perceive America as the strongest nation in the world are unhappy with a president who does not project power and tries to convert adversaries through debating points to get his way. They want a president who will readily employ bombs and soldiers when America or Americans are disrespected or pushed around.

 The Donald is their man. In so many ways, Trump is the polar opposite of Obama and an excellent pick for citizens who are hostile to the president. Personality-wise, Trump is passionate and outgoing about his actions and choices and prone to make them on the spur of the moment, unconcerned about the consequences. Not infrequently, however, he has to backtrack on his off the cuff statements. His staff may remind him that what he has said may alienate voters and that he should take back or reverse his assertions. These changes of direction with claims that he is flexible do not seem to affect his support or induce citizens to abandon him. Indeed, the name-calling, insults, and shouting by Trump seem to gain him more adherents who admire him for “telling it like it is,” unlike the usual politicians. And his backers dismiss his upholding of Planned Parenthood or his previous acceptance of abortion, and his “evolving” position on same-sex marriage.

 On race Trump is again the negation of Obama. Trump is most assuredly the candidate of poor and lower middle-class white men, and white supremacists, all of whom loath the president. Republican propaganda and sound bites have demonized Obama and his proposals that helped the lower and middle-classes, and uneducated white men believe these messages. Now along comes Trump who promises to repeal the ACA and devise a better plan in its stead. And throughout his rallies Trump also exudes vibes that appeal to white racists, using code words and phrases with double meanings. And white men like his veneer of power and self-confidence, promising to restore America’s greatness and to fix the economy (which is particularly broken for uneducated poor white men). Trump also backs right-to-work laws which is killing the union movement and making it more difficult for poor whites to obtain jobs that provide reasonable pay and benefits.

 Immigration is another area where Obama and Trump are hostile opposites. His comments that he would build a ten-foot wall at the border to keep Mexicans out and having Mexico pay for it was totally inappropriate and impossible to achieve, but his constituents loved it. (Actually, a wall would keep Mexicans in America as more are now leaving than coming in, though Trump did not bother with the facts.) His enthusiasts also cheered at his descriptions of Mexican immigrants as rapists and drug dealers though statistics show there are lower crime rates among immigrants than the population at large. In addition, his pledge to keep all Muslims out of the country gained him more support from his core constituents who want America for Americans and to maintain it as a white, Christian nation. Obama on the other hand favors prudent reform with legalization and a path to citizenship for undocumented immigrants after they pay their taxes and await their turns.

 One has to feel understanding and compassion for these poor, uneducated white men who see no future for themselves, many of whom turn to drugs and alcohol for solace. The answer for them and their children is not Trump, but education. Otherwise, the poverty and anger will be passed on from generation to generation as blue collar jobs become even scarcer. Obama is not to blame for their situations and Trump is not the agent who will make things better.

Resurrecting Democracy

www.robertlevinebooks.com

Experience Counts

            Robert A. Levine   5-5-15 

In politics, as in every other field, experience counts, and in fact may be the most important quality a candidate for an important post possesses. This is even more true for the presidency than any other position. Certainly, there are some things one can learn on the job, but a certain level of sophistication and experience are necessary in a president for his or her administration to be successful. Wisdom only comes with age, and a short stint as a senator, governor, or community organizer is not enough to produce an outstanding president. (This is not to say that experience alone makes a good president.) 

Would you want a high school player to manage a professional sports team, making the personnel moves and controlling the strategy and tactics? Would you hire a person with no managerial or administrative experience to be the CEO of a large corporation? Would you want an inductee into the Army to be placed in charge of a division, directing its moves and plan of attack when confronting the enemy? 

The answer to all the above questions is obviously no. You would desire someone with experience for these jobs, someone who knew how to interact with people, motivate them properly, and get them to function the way he or she wanted, so that the team or company or division would work well together. 

The same is true in politics and particularly for the presidency. The president doesn’t have to be knowledgeable in every field, as he or she hires the cabinet and presidential staff to take care of running the various departments and agencies of the government, coming to the president when important decisions have to be made. 

But the president has to be sophisticated enough and have adequate experience to choose the right people for his or her cabinet and staff. And he or she has to be able to manage them and make sure all the departments and agencies are running well. For anyone thrust into this position, the tasks can be overwhelming, and almost impossible for someone with no managerial or administrative experience. 

To get his or her agenda passed, the president also must interact with important members of the Senate and House, including the heads of the opposition party. This means being able to “schmooze” with them, dine with them and their wives, and enjoy relaxing time together. If there is comity and friendship between the president and the members of Congress and the Senate, it is possible to get more important legislation passed, as an aura of trust is built up and the ability to negotiate options in various bills. This is part of a leader’s experience, being able to deal well with customers and the competition, convincing them of your vision and how it might benefit them. 

Lecturing people, or trying to teach them from a higher plane is not the answer, as that merely antagonizes them and makes it less likely your ideas will be accepted. Friendship, or at least a common respect has to be engendered among people at all levels to instill a willingness to work with a leader in any field. 

Reluctantly, I must admit that my wife and I voted for Obama both in 2008 and 2012, expecting that he would be able to change the atmosphere in Washington, bringing Republicans and Democrats together to get the nation’s work done. There is no question that the Republicans have gone out of their way to stymie Obama during his years in office, to guarantee that his presidency would not be considered a success. But Obama did not challenge them aggressively enough in an attempt to get things done in a bipartisan manner. He did not reach out to their leadership to establish relationships with them, to schmooze, or have dinners, or pick up the phone and shoot the sh-t for a while, so that he or they could easily talk whenever necessary to try and work out problems. 

Obama also concentrated on passing the Affordable Care Act when he took office, instead of attacking unemployment and a tepid economy. Those were the areas concerning most Americans and Obama dropped the ball perhaps due to a lack of experience. Health care reform was needed but shouldn’t have been at the top of his to-do list. 

Obama has also not been able to develop close relationships with any foreign leaders. The problems have been the same as his inability to bond with Senators or members of Congress. He has also projected a belief that America was weak, being unable to reach an agreement with Iraq to leave American troops in place, which might have stopped ISIS from forming. He also let Syria cross the “red line” he had set up, saying the US would not let Assad get away with using poison gas as a weapon. These and other actions may have emboldened Russia’s Putin to grab Crimea and more of the Ukraine, knowing the US would not react in any significant way. 

A leader with more experience may have run into the same problems as Obama, but there was a better chance of that person being more successful because he or she had been “around the block once or twice before.” Experience does count. 

Resurrecting Democracy

www.robertlevinebooks.com

Who Gets Credit?

            Robert A. Levine   3-31-15

The Republicans have been howling since Obama was elected that his policies would prevent the economy from improving. They also railed against the Federal Reserve’s strategies, saying they would surely cause considerable inflation and do nothing to help the economy recover. Austerity was needed, the Republicans advised. America needed to cut its budget deficits and pay down the national debt or the economy would remain in the tank or sink further. 

Well, now that the economy is doing well, with the GDP in a decent range and unemployment at reasonable levels, who gets the credit for bringing the economy back? Should the Republicans recant and admit their criticism was wrong? (Fat chance of any politician admitting he or she was wrong about anything.) Was it the initial stimulus pushed by Obama that got the ball rolling? Was it the low interest rates by the Fed and their bond buying that put the economy back on the right track? Fortunately, austerity was never introduced in the U.S., unlike Europe where the economy is still in trouble, the Euro is crashing, and unemployment remains high. And by the way, there are no signs of inflation in America. Of course, according to the Keynesians, the economy would have improved faster and be stronger now if the stimulus has been larger and lasted longer. 

In addition to the American economy broadly outshining those of Europe and Japan, the budget deficits have been cut dramatically over the last few years instead of going up. This was not because of austerity but because the economy was growing and government revenues were greater. So those who were worried about the budget deficits and the national debt increasing astronomically were obviously off base. 

Maybe the Republicans will claim that their Congressional actions were responsible for the economic recovery because they didn’t permit a larger stimulus which kept the budget deficits under better control. What does it matter that our infrastructure is falling apart and the time to fix it cheaply was when interest rates were low and plenty of construction workers needed jobs. The stimulus should have much greater and devoted to fixing our infrastructure. 

I think at some point, the GOP should concede that the Obama administration and the Fed in concert were responsible for the economic recovery and the low levels of unemployment. Undoubtedly, there will be some way the admission by the Republicans will be colored to make it seem as if the American economy was too strong to be kept down and that the policies of Obama and the Fed just helped it slightly as the recovery would have happened anyway. They can tell that to the Europeans who are still struggling and whose central bank has only recently started to copy the actions of the Fed. Though it will never happen, Americans need to give three cheers for the Federal Reserve and the Obama administration for doing the right things in bringing our recovery back. Hip, hip, hooray. 

We can also expect convoluted attacks on the Obama administration and the Federal Reserve by the next coterie of Republican presidential candidates who have no choice but to find fault in the way the government was run (even if it were successful). It’s all part of the political game where you have to find issues about which you can blame your opponent. And the economy is most important. As Election Day nears, the attacks will escalate, big fights over nothing. And some historians in the distant future will write some books about the recession and how quickly America recovered, giving credit to the Obama administration and the Federal Reserve for doing the right things when missteps could have been disastrous.

Resurrecting Democracy

www.robertlevinebooks.com