Monday, August 03, 2009

I love this Salon article by Michael Lind:

It's of medium length, but hits on several issues that have preoccupied me for years. Basically Lind (and I) are New Dealers and are see neoliberalism as harmful to labor.

Lind's article is for you if you've never been impressed with Bill Clinton, Larry Summers, and Robert Rubin.

An edited summary:

New Deal:
  • The state provides both social insurance and infrastructure.
  • The private sector engages in mass production.
  • New Dealers approve of Big Business, Big Unions and Big Government.
  • Finance should be strictly regulated and subordinated to the real economy of factories and home ownership.
  • They are economic internationalists because they wanted to open foreign markets to U.S. factory products
  • Support for social insurance systems like Social Security and Medicare, which were rights (entitlements) not charity and which mostly redistributed income within the middle class.
  • New Dealers prefer a high-wage, low-welfare society to a low-wage, high-welfare society. To maintain the high-wage system that would minimize welfare payments to able-bodied adults, New Deal liberals did not hesitate to regulate the labor market, by means of pro-union legislation, a high minimum wage, and low levels of immigration (which were raised only at the end of the New Deal period, beginning in 1965).
Neoliberals: (which include DLC folks)
  • Supported the deregulation of infrastructure industries that the New Deal had regulated, like airlines, trucking and electricity ...
  • Neoliberals teamed up with conservatives to persuade Bill Clinton to go along with the Republican Congress's dismantling of New Deal-era financial regulations.
  • As Asian mercantilist nations like Japan and then China rigged their domestic markets while enjoying free access to the U.S. market, neoliberal Democrats either turned a blind eye to the foreign mercantilist assault on American manufacturing.
  • While Congress allowed inflation to slash the minimum wage and while corporations smashed unions, neoliberals chattered about sending everybody to college so they could work in the high-wage "knowledge jobs" of the future.
  • Rubin helped to wreck American manufacturing, by pursuing a strong dollar policy that helped Wall Street but hurt American exporters and encouraged American companies to transfer production for the U.S. domestic market to China and other Asian countries that deliberately undervalued their currencies to help their exports.
  • By claiming that American workers are insufficiently educated for the "knowledge economy," neoliberal Democrats divert attention from the real reasons for stagnant and declining wages -- the offshoring of manufacturing, the decline of labor unions, and, at the bottom of the labor market, a declining minimum wage and mass unskilled immigration.
About those "knowledge jobs". For two decades that's been the refrain, as if the rest of the world can't compete. But if you recall, Alan Greenspan was totally jazzed about high speed Internet because it would allow knowledge jobs to be performed elsewhere. We all hear about the call centers in India, but there's more than that. I provide technical support to a physician who does a final review of test results. Records that are first processed in India by non-technicians and non-physicians. The only reason the physician is involved is because state law requires an in-state doctor to give the final sign-off. Reviewing these test results is a knowledge job that has been moved to a low-wage country. While there may be some cost savings, the ultimate result (over time) is less power and smaller wages for labor. This is the neoliberal dream, partially influenced by the New Left, which is less nationalist and therefore sees jobs going overseas as just fine, because those folks need work too. (The Brad DeLong position, which I oppose.)

I do not understand why self-proclaimed liberals are for free trade, high immigration (skilled or not), and think that education is the cure-all. To a degree the New Deal was a planned economy, but in a particular way. Done right, a degree of planning and control works (ask Japan, Korea, and now China). It can go overboard, but it's not too hard to tell when and follow up with reforms. The New Deal is considered a relic of an old fashioned manufacturing economy. But what applies to manufacturing can also apply to service jobs (aka knowledge jobs). The New Deal has largely been vindicated, especially in the financial realm. It's time to embrace its principles again.

CODA: Out of 50 comments at Salon, there was only one who agreed with Lind, so clearly I'm in a distinct minority. Other comments were opposed to Lind or on a totally different topic (e.g. Sarah Palin). Some commentators were upset that Lind was declaring Obama a neoliberal and therefore dissing him.


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