Tag Archives: United States

Hoist by his own petard: Obama, the ACA, and the neo-progressive model

27 Nov

The recent controversy over HealthCare.gov, the still glitchy website through which the uninsured are supposed to apply for coverage under the Affordable Care Act, had seemed to us like a tempest in a teacup. It looked like just another iteration of partisan posturing over a law that is somehow both a fait accompli and an incomprehensible mess. But a scathing editorial from Bob Kuttner, editor of The American Prospect, made us stand up and take notice. Attacking Obama for being “tragically and inexcusably hands-off” Kuttner concluded that “the debacle reflects both flawed legislation and flawed leadership.” This editorial is notable because, for one, Kuttner is a left-liberal, usually sympathetic critic of the administration, not a right-wing bandwagoner. Other liberals began to join in. William Galston, a political philosopher who worked in the Clinton administration and now at the Brookings Institute, recently wrote in the Wall Street Journal that “Every experienced manager knows that, left to its own devices, the system will not always behave this way…So the president must lean against these perverse tendencies…[but] it has become clear that President Obama failed to institute such arrangements.”

These criticisms of Obama are more than just indications of liberal discontent. The attack on Obama for being incompetent hits the president where it hurts: the latter’s attempt to replace politics with expert management. The health care law was not just Obama’s signature initiatve, it was also the single best representative of his general post-political approach to politics. Obama thought he could rise above partisanship by taking an essentially Republican plan and then leaving it up to Congress to manage the details of compromise. He thought he could avoid all semblance of ‘class warfare’ by taking single-payer off the table and by eliminating any talk of redistribution. He thought he could find a consensus plan by working with, rather than taking on, the insurance companies. In other words, the belief was that he could get something done without taking any sides or even acknowledging that there were significant conflicts of interest and principle. The result was a public-private partnership that yielded a measure of agreement not so much because everyone could see their interests represented in the final result as because nobody could understand that result. It was legislation by stupefication.

Yet amid all of this, there was still one promise – that the Obama administration itself understood the moving parts. Once passed, the wonks and managers would deploy their technocratic savvy to guarantee the thing worked. ‘Fixing a broken system’ is the hopelessly apolitical metaphor endlessly deployed to describe this (and every other) piece of social policy the administration promoted. Somehow, though, the master technician rose so high above politics that he never made it back down to earth. As Kuttner observes, “This law, after all, is Obama’s signature initiative. It has been on the books since March 2010, with a full implementation date of 2014. An engaged chief executive would have been demanding frequent and detailed progress reports from his team. He would have gotten early warnings about possible glitches. But this president is tragically and inexcusably hands-off.” Galston says much the same, noting that in late September and early October checklists showed major and repeated failures during dry-runs of the website, concluding that there is good reason why “the president’s standing as a competent manager of his own government has eroded badly.” There is very little to be said for Obama’s passionless program of ‘getting things done,’ but even by his own low standards he has been caught out. In the Obama era being a bad manager is close to the worst thing you can say about anyone.

Of course, now that a management consultant has been brought in to patch up the website, we are supposed to rest assured that all will be right in the world. Undoubtedly, the technical problems with the website will eventually be resolved. But this was never just a problem with administrative efficiency, it was with a model of politics that one might call neo-progressive. Despite their many limitations, the original American progressives at least thought there were political tasks that could be best achieved through collective political agency. Neo-progressives like Obama, and Clinton before him, have raised what began as Reagan’s attack on Washington to the level of a concept. Not only have they tended to accept the view that public ownership and administration is, in itself, inefficient when compared to ‘market solutions,’ but they have turned this into a kind of principle. The operating assumption is that any government program would be better run as a public-private partnership operating in an artificially created market. The truth is much the opposite.

Here again, Kuttner’s recent editorial is on the mark. Noting the difference between Social Security and Medicare on the one hand, and the ACA on the other, he writes

“These great achievements [Social Security/Medicare] are public public programs, efficient to administer and testament to the fact that government can serve social objectives far more effectively than the private sector. Obamacare, by contrast, is the inefficiency of “public-private partnerships” at its worst. It is a public subsidy for the private insurance industry. No fewer than 55 separate contractors were hired to design the software. Yet though it is not a true public program worthy of the name, Obamacare is being used to discredit government.”

The argument generalizes to other boondoggles, like private prisons and highways. Not to mention that other signature, public-private Obama initiative – the charter school. These ‘partnerships’ reveal a special viciousness – they are harder to manage. That is because, as Kuttner notes elsewhere, “a layer of complexity is added because of the need to supervise and monitor the private vendor. Corruption is invited, because it pays the vendor to offer disguised bribes to the public officials in charge of the contract.” The standard response, moreover, is to try to expertly manipulate the incentives of the market in which these entities operate, itself an impossible task that introduces only more complexity and confusion.

The deepest irony, then, of the neo-progressive vision is that its faith in expert management is belied by its lack of belief in the public. Indeed, the reliance on private contractors, management consultants, financial executives, isn’t just a sign of corporate influence, but also of a skin-deep confidence in their own powers. It is not so much the product of corporate corruption as it is a vision of politics that invites such corruption, beginning with a natural and spontaneous belief in the intellectual prowess of the managers, CEOs and Wall Street financiers upon whom they end up relying. In this context, Obama’s oft-noted deference to major private sector consultants, in areas like finance, health and educational policy, are not so much a personality quirk as an ideological position. Rising above politics turns into an attempt to find a place beyond reproach, indeed, beyond the point at which one can be held accountable at all.

No wonder, then, that the legislative products are not only incomprehensible and difficult to administer, not to mention designed to blur the boundaries between public responsibility and private interest, but that Obama then finds himself hoist by his own petard. Of course, from the neo-progressive standpoint, it appears like everyone from Republicans on down to the “professional Left” is unreasonable. But it turns out the truly unreasonable position is the one that hopes to avoid the messy world of taking sides, of competing interests and political fights. At the end of the day, democratically determined objectives, like universal health care or public education are best promoted…democratically. That doesn’t just mean through socialized programs, but in a way that makes as transparent as possible the lines of authority and responsibility.

The Shadow Right

11 Oct

A familiar progressive narrative in the United States goes something like the following: “we could have achieved so much if it weren’t for the Southern racists, the religious reactionaries, the corrupt billionaires and the undemocratic procedures.” There is no question that many American institutions are deeply undemocratic, and purposefully so; it is equally evident that some of those driving the shutdown are, at best, uninterested in the normal democratic practices of convincing others of their views, and, at worst, looking for any means necessary to protect their unjust and unequal privileges.  But the recent flurry of effort to decipher just who this right-wing is reproduces a persistent error in the progressive narrative: a failure to address the conservatism of Democrats and the chaos and passivity of the American Left.

For instance, one prevailing question has been why the Republican Party would be willing to engage in apparent ‘anti-business’ brinksmanship that threatens the stability of global financial markets and draws us closer to another credit crunch? One explanation is that business does not control the Republicans (also here), which is why it can engage in seemingly irrational, ideological political games. Another explanation is that a “small group of radicals” are acting rationally with respect to their own interests, even if those interests are not the same as the national interest. Michael Lind has made the most persuasive version of this argument, claiming that this is a movement of regional elites or “local notables,” who find their power threatened by global financial markets and nationalization of social policy. Joe Lowndes reasonably argues this somewhat overlooks the national basis of the movement, and the tacit support of it among the Republican Party as a whole. And Doug Henwood has added the important point that a background class condition for these kinds of political games with American credit-worthiness and the stability of global finance is the increasingly fragmented and short-termist orientation of the capitalist class.

The emphasis of all these analyses is on the relative power and rationality of a right-wing movement. In this environment it is easy to forget some things about the Democrats and whatever stands to their left. The initial phases of this battle have essentially featured Obama going to the mats to defend the Republicans of the 1990s from the Republicans of today. Recall, for instance, that the basic principles of ‘Obamacare’ including the individual mandate come from Republican thinking circa 1994. As the negotiation now seems to be transitioning from the health care law to spending and entitlements, it is again worth recalling the Democratic embrace of the conservative position. Obama and the Democrats’ wider approach to the budget process is to affirm the need for balanced budgets (in contrast to at least some right-wing Keynesianism).  Presenting themselves as the party of responsible government and budget moderation is their only idea, even at a time when the cost of government borrowing is at historic lows. This is pretty thin gruel, especially for a public laid low by persistent high rates of unemployment, stagnating wages, and crappy jobs. All in all, the Democrats don’t have much on offer as an alternative. All they have is their much vaunted moderation. A moderation that can’t even make sense of the occasional political necessity of disruption.

But what is most striking about the present is not the virtues of moderation but of the potential power of conviction. One detects, behind all the anxiety about ‘extremists,’ ‘radicals,’ and ‘militant minorities ‘ a degree of envy. On the right there is a group with enough commitment to a shared project that is willing and able to disrupt the ordinary functioning of government. If only the Left had such wherewithal. We might, at the very least, get something more than than the economically stagnant, politically oppressive Mugwumpery of the Democratic Party.

The Real Culture War II: Utopia, Austerity and the F***** C****

18 Dec

Yesterday we argued for carrying the culture war into the heart of the American political economy. We made the very broad claim that a defining feature of our economic culture is the acceptance of limits. This might seem like a strange thing to say. Surely the last decade was marked not by limits but by a failure to acknowledge them. Individuals, businesses and eventually governments borrowed well beyond their means. That, so the story goes, was what created the credit crunch and the stagnant new normal. It is certainly the narrative behind the growing deal, in which Republicans appear to be ‘conceding’ on some tax hikes while Democrats accept 5-10% cuts to Social Security.

But that narrative exactly misreads the role of credit and consumption. The expansion of credit was largely an attempt to overcome the limits of capitalism within capitalism. As is now common knowledge, the expansion of consumer credit presupposed stagnant wages:

Real Household Debt Wealth Income

And, as the graph shows, it began with sagging profit rates of the late 1970s – perhaps most famously marked by Volcker’s revanchist announcement that “the standard of living of the average American must decline.”

Slide1

(graph from Robert Brenner, see also Henwood.) What the expansion of consumer credit permitted, in other words, was the appearance that capitalism could accommodate the expansion of desires, the demand for ‘more,’ even while suppressing labor costs and increasing the expropriation of the expropriated.

The expansion of credit over the past thirty years was in a sense a massive bridge loan to cover the transition to a leaner set of arrangements, in which more jobs would be low-paying, part-time and insecure, labor would be less able to defend attacks on the standard of living, ‘job-creating’ capital would take home a larger share of the pie and then basically sit on it, and politicians could pretend serious economic issues could simply be managed by technocrats.

The major problem with the credit crunch was not the attempt to surpass existing limits to consumption, but with the implicit practical belief that credit could in any way rise above and compensate for the class defeats of the past twenty years. Just as Obama has frequently tried to rise above politics in the name of some abstract non-partisan unity, so too did the borrowing public hope it could rise above the real disparities in society, without having to face them directly.

To put it another way, the ‘fiscal cliff’ is not just a false emergency engineered by Republicans and Democrats, it is the culmination of decades of attempting to paper over the limits, not merely injustices, of the American economy. It is not just that both parties have joined the austerity bandwagon, they in the process are attempting to neutralize the only utopian moment of the past few decades: the satisfaction of desires that the current society cannot satisfy. The expansion of debt would have been unlikely to succeed had that desire not been there to sublimate.

Of course, critics may say that many of these desires took a form not at all challenging to a consumer society. That criticism has some teeth, and we will take it up in tomorrow’s post. However, moving too quickly towards anti-consumerism not only misses the utopian moment, but also blurs quickly into the bland and conservative narrative of arguing we should do more with less. The starting point for an economic culture war must be to reject the austerity party and its culture of low expectations. Any reconstruction of meaningful alternatives must begin by rejecting that piece of our economic culture. After all, the so-called ‘solution’ of a grand bargain is really just a an attempt to throw back on society the political class’s own lack of imagination and inability to deal with the problems it has inherited.

(to be continued)

On politics and finance

30 Nov

Buried under the frenzy around the Leveson report was the British government’s coup of attracting Mark Carney, governor of the Canadian Central Bank, to London. Apparently ruled out of the running, much to the chagrin of those who felt he was the best man for the job, Carney has now been appointed as governor of the Bank of England and will take up the job next summer. For those who view these appointments as purely about expertise and experience, this is a great victory. Gone it would seem are the mercantilist days where nationality, wealth and government policy were so closely aligned. The cosmopolitan financial press, from the Financial Times to The Economist, are satisfied. Britain, it seems, is a pioneer in these international recruitments for national institutions: think of the English football team. That Carey was a Canadian certainly helped make him acceptable to the British establishment. He’s sort of one of us, after all, runs the sentiment. But the principle still stands that positions such as these are all about competence and expertise. There is no politics or partisanship here and the appointment of Carney, we are told, is proof of that.

It is also proof of a number of other things. One is that there is emerging a cadre of elite central bankers who move relatively seamlessly from one appointment to another. National boundaries seem less restrictive than in the past. This holds true to some degree at the global level, where competition for posts such as head of the IMF or the World Bank has become more intense. The old Bretton Woods division of the spoils between Europe and the United States is coming under serious pressure and may not survive the next round of appointments. And nationally, central banks are opening up with Britain leading the way. Curiously, the European Central Bank in this regard is behind the times: its appointments are rigidly based upon the principle of achieving balance between nationalities. The unfortunate Lorenzo Bini Smaghi was edged out of the ECB executive board because it wouldn’t do to have two Italians in there and no Frenchman. Draghi became director, Smaghi was out, and Benoit Coeuré was in. This seems rather old hat and overly political compared to the forward looking Bank of England. Whether other central banks follow Threadneedle Street’s example is unclear but the principle has been established and there is no short supply of expert central bankers.

It is also proof that the way we understand banking, finance and monetary policy today is entirely free of political principle. The struggle between banking and financial interests and those of elected representatives is a long-standing and epic struggle. There is nothing new there. But central banks have often been seen as exceptions. They are, after all, lenders of last resort and in that respect are eminently political institutions. Those critical of the ECB in the current crisis have often suggested that it’s role should become more, not less, political in so far as it needs to act in order to save the Eurozone from collapse. Yet the implication of Carney’s arrival is that the tie between central banks and national politics should be cut. This is a mistake. Carney may be Canadian but the Bank of England remains firmly part of the functioning and survival of the British economy. And the Bank of England should still be understood as an agent of national capital, in spite of who is running it.

Carney’s appointment also chimes with a more general feeling that politics is seeping out of macro-economic policy as a whole. Illustrative in this regard is the debate underway at the moment around who might replace Tim Geithner as US Treasury Secretary. One name that has been floated around, and who the FT considers a realistic outside contender, is Larry Fink. As head of the biggest asset management group in the world (BlackRock manages around 3.7 trillion US dollars of assets), Fink is a heavy-weight figure, as important as those running the big Wall Street banks. However, his entire background is in finance. He certainly has views about how the US economy should be run but to appoint Fink would be to give the job to an expert. And this is not a job as central banker but as Treasury Secretary, an ostensibly political appointment. Of course, experts have long been appointment to this position. There is even talk of Geithner stepping down and joining BlackRock and Fink moving in to take his place. Were this to happen, it would illustrate how firmly financiers dominate economic policymaking and how expertise in finance has become the baseline for political appointments within the US Treasury.

As we’ve argued before on this blog, expertise does matter in politics. But the overwhelming tendency today is to view macro-economic policy as a purely technical realm, rather than as one where technical questions co-exist alongside fundamental differences of political principle and alongside important moral questions. Such a tendency has the effect of shielding economic policy from public criticism and gives to public financial institutions like central banks a veneer of political and social neutrality. In fact, no amount of expert knowledge can obviate the need to make political choices. The most honest experts will say that various scenarios are possible and that the choices depend upon what outcomes we want. It is these outcomes that we should be debating, not which expert can magically solve our ethical and political dilemmas about what sort of society we want to live in.

Varieties of finance?

17 Oct

In a previous post, we looked at the structure of the European banking system. We asked whether there was a particular European story that can help explain the sorry state of the current European economy. It was noted that the size of the European banking sector, so much larger than in the United States, reflected the central role banks in Europe play in financing the private sector. In the US, there is more reliance on capital markets than on banks and so the assets to GDP ratio of US banks is much lower than in Europe.

Can we transform those differences into something more systematic? Do differences in financial markets point to deeper and broader differences between different types of societies? The question here is whether there exists the same kind of variety in financial sectors as there does in capitalist economies more generally. A popular way of classifying capitalist systems is according to type: liberal market economies, coordinated market economies and mixed market economies. This is the famous “varieties of capitalism” approach. Can we say that the financial sectors in Europe are shaped by these national institutional factors? One basic distinction, for instance, is between market-based and relationship-based borrowing and lending. In more liberal market economies like the UK, companies are expected to rely more on the open market as a source of finance. In a coordinated market economy, corporate financing is fed through bank-to-business relationships.

Finding out whether any of these patterns exist in the date on financial markets is not easy. Interest has tended to be in the ties between business and politics, not in the correspondence between differences in financial markets and broader varieties of capitalist production. But there is some data out there. In the Liikanen report on the European banking industry, we see little evidence for these kinds of patterns. In terms of the balance between stock market capitalization, total debt securities and bank assets, we do see differences between Europe and the US. But within Europe, a supposedly liberal market economy like the UK has bank assets that massively outstrip any other European country and offsets its larger stock market capitalisation (p119 of the Liikanen report). The data on financial institutions and markets collected by Thomas Beck, Ash Demirgüç-Kunt and Ross Devine (available here) is extensive but suggests that the biggest difference is between income levels, not between varieties of capitalism. Another way of thinking about the varieties of financial markets is whether it can help explain different national government responses to the current economic and financial crisis. One study of this by Beat Weber and Stefan Schmitz (available here) found that institutional factors did not in fact influence very much the rescue packages put together by European governments. They point instead to other factors. The degree of inequality in society, which they take as an indication of the fact that policymakers in those countries use access to credit as a substitute for higher wages (what Colin Crouch calls “privatized Keynesianism” – see here), is for them one element that explains the form the government bail-outs took. On the varieties of capitalism, they note that as an approach it is focused more on production and not on financial systems. It has therefore little to say about financialization as such.

National differences remain important and a feature of the current crisis is the difference in the national responses. Behind efforts to build a common European response are national bail-out packages that differ greatly in terms of size and in the strictness of their conditions. But financialization as such, and the boom of the late 2000s, was common to many high-income countries. By way of explaining the current crisis, Beck and his colleagues write that “the lower margins for traditional lines of business and the search for higher returns were possible only through high-risk taking” (p78 of this paper). The implication here is that the lack of profitability in the real economy drove the expansion of financial activity in the 2000s. This explanation isn’t perfect but it certainly helps us understand why it has been so difficult for governments to return to positive growth. If financialisation was itself more symptom than cause, then we are still left with the causes of the crisis today.

The state of European banking

5 Oct

 

In his assessment of a new report published on banking reform within the EU, Martin Wolf starts off with an arresting statistic. In 2010, he writes, US banks had assets worth 8.6 trillion Euros. Banks in the EU had assets worth 42.9 trillion Euros. For the US, those assets represented 80% of GDP; in the EU, they represented 350% of GDP. The EU’s banking sector, claims Wolf, is too big to fail and “too big to save”.

Wolf’s fact raises interesting questions. Can we say that in Europe the expansion of the financial sector has been so significant that it dwarfs developments in the US and gives us an explanation for Europe’s current sovereign debt crisis? Explanations of the Eurozone crisis have in recent months increasingly focused on governance issues tied to the Eurozone itself and to poor economic performance of many Eurozone economies. Is the implication that the crisis is a European affair?

A useful place to look in order to answer these questions is the report that Wolf cites, put together by a group of experts and led by Errki Liikanen, governor of Finland’s central bank. Most of the coverage of the report has been about its recommendations: ones that are not so different from those of the Vickers report in the UK (see here for a comment on Vickers). However, the report itself gives a detailed account of the crisis and of the transformations in the European banking sector.

In general, it implies that whilst there is variation, there is no “European exception”. The origins of the crisis lie in the collapse in the sub-prime mortgage market in the United States, which put a number of lending institutions into serious difficulty. This localized crisis quickly fed through an internationalized financial system to affect non-US institutions. Many European banks were left with very bad loans on their books: the German bank, Deutsche Industriebank IKB, was one of the first to be bailed out by the Bundesbank. As early as August 2007, the interbank lending market in Europe dried up altogether: the ECB had to step in with an injection of 95 billion Euros. In December of the same year, it injected a further 300 billion. At issue here is the generalized dependence of US and European financial institutions on what turned out to be very bad loans.

On the size of the assets of European banks, compared to other parts of the world, the report also has a lot of good information. The report notes that the EU banking sector is very large when compared with other countries and regions, as the figures above make clear. However, it notes that this reflects the fact that bank intermediation plays a bigger role in Europe than elsewhere. What this means is that banks are the principal source of private sector financing in Europe in contrast to the US for example. Banks in Europe also have mortgages on their balance sheets, whereas in the US Fannie Mae and Freddie Mac soak up these mortgages and are government-sponsored institutions. The staggering difference in the assets of banks in Europe and the US is not automatically a sign of different trends in financialisation but points also to some more long-standing differences in the nature of private sector financing. The report also notes that the restructuring of the banking sector which occurred in the US post-Lehman, in particular the collapse of small and medium-sized banks, has not occurred in Europe. The level of total assets has thus remained constant, propped up by ECB and national government intervention in Europe. Here there is a marked difference between Europe and the US: interventions in Europe have prevented restructuring, in the US they were a conduit for change.

There is no particular European story to the growth of the financial sector in Europe. Some specific features of bank intermediation have interacted with more generic features of financialisation that we can observe in Europe and elsewhere. What is less clear from the report itself is whether the growth of the financial sector has been the result of changes within the non-financial sector, a freer regulatory environment or simply the working out of a speculative frenzy within financial institutions aiming to make more money in the short term, with little regard for longer term consequences. The recommendations of the report suggests it believes that the latter two factors are the most important.

Still no alternative to austerity

24 Aug

An interesting post on austerity over at the Economist’s Free Exchange blog. It makes the point that British business – generally in favour of austerity measures when they were first introduced back in 2010 – is now beginning to change its mind. It’s not difficult to work out why: Britain is facing a third quarterly decline in GDP, with a 0.5% contraction in the British economy expected for the second quarter of 2012. For the UK this is particularly galling given the fiscal boost of the Olympics and the expectation that this would mean a heady summer for at least some British businesses. Perhaps it is true that as many people left the UK as entered it for the Games, making the net effect close to zero.

The Economist’s post suggests that the tide is perhaps turning in the UK, with austerity giving way to a new consensus around pro-growth measures. It notes that Cameron’s government is considering an “economic regeneration bill” for the Autumn and that Boris Johnson – with an eye perhaps on the Tory leadership – is talking up the need for big government infrastructure projects (based around London, of course).

The difficulties faced by the UK economy should give food for thought to those arguing that the route to economic growth lies via an exit from the Eurozone. One might have expected the UK to boost competitiveness through cheapening its currency but – on the contrary – the British pound has become something of a safe haven for those with lots of cash. Life outside the Eurozone may mean currency flexibility and low borrowing costs but that isn’t helping the British economy. The debt burden for individuals and businesses, incurred in the heady pre-2008 years, is still depressing growth and holding back new investment plans.

The idea that the tide is turning at the level of elite opinion is difficult to substantiate. There were always voices calling for moderate fiscal stimulus alongside cuts in government spending. Back in 2010 the debate between the Tories and Labour was not about whether the government should drastically reduce spending – both agreed that it should – but it was all about timing. Shock treatment versus gradual reductions eased along via some discretionary spending. Austerity was the backdrop with the debate focused on how, not if. Little, it seems, has changed.

As noted on The Current Moment last week, the debate in the US presidential campaign is also about how the government’s deficit can be reduced, with both camps fighting over who is more credible in their deficit-cutting plans. In France, a government was elected with an ostensibly pro-growth agenda. In his campaign speeches, Hollande regularly fulminated against austerity politics, claiming he represented an alternative. And yet – bar the few measures introduced that are intended to put a little more money in people’s pockets – the real challenge for the Hollande government is the 2013 budget and finding the money to meet its balanced budget obligations. Much to the chagrin of the left of the Socialist Party, Hollande has signed off on the EU’s fiscal compact with little regard for the growth measures he had promised. Budget cuts will be financed in part via higher taxes but also via spending cuts. The Greek premier, Antonis Samara, is about to undertake a desperate trip to Paris and Berlin where he will ask for a bit more leeway in his efforts at balancing the Greek deficit. Merkel and Hollande are shifting all responsibility for the decision on whether to grant Greece an extension to the Troika, as if the issue was a technical one to be decided by accountants from the European Commission. From the US through to Europe, there is little evidence that the tide is turning.

Even though economies are stagnating under the burden of austerity measures, the intellectual case for an alternative still needs to made. Until then, it will be more of the same.

Interview with Hillel Ticktin

5 Apr

Following up on last year’s Current Moment interviews, today we are publishing an interview with Hillel Ticktin, Emeritus Professor of Marxist Studies at the University of Glasgow. An internationally renowned Marxist scholar, Professor Ticktin co-founded in the early 1970s the journal Critique.  He has published numerous books and articles over the years. In 2010, Critique published a special issue on the current crisis to which Ticktin and others contributed.

Eurozone leaders are going on record saying that the worst of the sovereign debt crisis is over. Are they right to be so optimistic?

No. But then, the Eurozone country politicians are not going to tell the truth as to what they think, as it would spook the markets. Without growth, it will be impossible to solve the indebtedness problem, and Germany is insisting on harsh terms for giving loans, so harsh that there will be negative growth. This is clear in the case of Greece, where the newspapers are talking of the need for a future Third Bailout. But in reality it is highly likely that other countries will require further substantial loans. While Portugal will not be too much of a problem, a Spanish or Italian bailout cannot be financed on present Eurozone funds.

Yields have fallen on sovereign debt as the European Central Bank (ECB) has injected over 1 trillion Euros of liquidity into the European banking system in the form of longer-term refinancing operations. How has the crisis changed the ECB and has the ECB been the saviour of the situation?

The ECB has clearly put off the day when the crisis will have to be faced down. Banks have acquired sufficient liquidity to avoid problems and have invested money in their governmental bonds. The rational solution would have been the issuance of sufficient Eurobonds which would be used to fund the various countries involved. Since the Eurobonds would be backed by the successful Eurozone countries, investors will buy them. The ECB has produced a temporary measure but the amount of money involved is insufficient. Until the ECB can act as the Central Bank of an independent country in order to issue as much liquidity as it sees fit, and can help to issue Eurobonds, it is not fit for purpose.

The European approach has combined the backdoor provision of liquidity to its banking system with a frontdoor assault on government budget deficits and on national labour markets. What is your assessment of this approach overall?

Crazy. It is not really a European approach so much as a Conservative policy supported by the UK Conservative party, the Christian Democrats and Free Democrats in Germany, the Republican Party in the USA etc. It is not supported by the social democrats in France or Germany. Hollande has made that very clear. Of course in practice the social democrats do not live up to their promises, but they would ease the situation and might be pushed further by popular pressure. The question is why such a policy is being adopted at all, given that it cannot possibly work, and indeed is not working. It looks as if a section of the bourgeoisie has decided to take the opportunity to attack the working class so far that they would end up with a 19th century approach to social relations. That, in turn, would ultimately destroy the social democratic parties and replace them with revolutionary left wing parties. Whom the Gods would destroy they first make mad.

A feature of the politics of the Eurozone crisis has been the replacement of democratically-elected governments with technocrats. This occurred in both Italy and Greece. Does this signal a trend of some kind, that economic imperatives are being placed above political ones for instance? And does it suggest that European integration today is really about preserving the Euro?

This is an inevitable feature of the present. Once the majority of the population began to turn to the left, as in Greece, the capitalist system itself began to be threatened. The use of the army is not possible at the present time. Nor is a far right popular movement based on the so-called ‘middle class’, So they have had the ingenuity to invent a new undemocratic category of a non-political government,  which makes a mockery of the Parliamentary system.  This is much like the idea that US judges of the Supreme Court are above politics when they pronounce on political measures, even though they have been specifically appointed for political reasons. It does not fool the working class but people may be grateful that it is not worse. Since it will not work, there will have to be even more undemocratic solutions. In the UK during the Great Depression, there was a National Government. In effect a coalition of all the large parties. The fact is that the Parliamentary system was already cracking, so this is another stake in its heart.

There is no question that ‘economics is being placed above politics’. The only rational way to run a union with a common currency is to accept that the richer areas will help fund the poorer areas, in order both to help them catch up but also to maintain cohesion, based on principles of human rights. European countries usually accept such obligations, unless they accept that parts of their country will break away. After all, Germany taxed the West Germans to help the absorption of East Germany. Today, however, the ruling parties in Germany, the Netherlands and Finland appear to reject such an approach. The reason ultimately lies in the fear of instability in those countries. So, economics is not really being placed above politics, depending on one’s definitions of politics and economics. Instead one politics is replacing another. The reason is discussed in the answer to the next question.

Is there an alternative to this approach of national budgetary austerity combined with a pan-European fund intended to offset any threats to Europe’s banking system.

As the current approach is being widely applied and is widely distrusted, and can only fail, there has to be another alternative if humanity is to survive, whether in or out of the Eurozone.

We are in a downturn of depression proportions. The last Great Depression only ended with the World War. War, on that scale, is however, excluded at the present time. The only way out of the present impasse is for a rationally planned economic reconstructive process, with governments playing a leading role. As the ruling class supports small government and the extension of private enterprise, it will oppose any such move. On the contrary, it is afraid that any attempt to go for reflation with government participation will lead to a political upheaval. In my view, they are right that the population will demand increased economic and political participation under conditions of full employment. That is in effect the immediate alternative, which is why the ruling class wants to take the opportunity, instead, to achieve a defeat of the working class of epochal proportions. Looked at this way, the policy of austerity is a defensive measure to preserve capitalism. Seen this way the policy is not crazy but rational, even if its application is mad.

The future is not as apocalyptic as it might seem from that last sentence, since the most likely result for the present is that the austerity policy will be pulled back, even if only by social democrats. Growth will be low, poverty increasing and discontent rising. Ultimately there will be a denouement, but when is not yet clear.

Expropriating the expropriated (1983-2009), or, Why It’s the Top 20 not Top 1% That Matter

19 Jan

Recently, the Economic Policy Institute published “11 Telling Charts from 2011,” including the following one showing the share that different segments of the US Population took of the wealth gain from 1983-2009.

When we first looked at this chart, we started reading from the left and adding the numbers but did a double take by the time we added the Top 1%, Next 4%, Next 5%, and Next 10% – or the top 20%. Add their shares together and you get 101.7%. At first that just didn’t seem right, since our assumption was that when you add up all the shares one would get 100%. Naively, we had assumed that, while radically unequal, the gain in wealth for all quintiles would positive. A piece of folk philosophy in the United States is that the rich can gain huge gobs of money and power, so long as the poorest can also have some piece; and that those who rise do so on their own merits, but not by making the worst off even worse off. That, as it turns out, is also a premise of the most influential theory of justice in contemporary political philosophy, which states that the only permissible inequalities are those that make the worst off better off than they otherwise would be under pure equality.

The past twenty-five years have followed a different path from mainstream, common sense theories of justice. The worst have been made worse off. Meanwhile, the massive gains of the top 20% were only as large as they were because wealth was redistributed from the poor to the rich (with very moderate gains for the top 20-40%). The expropriated were expropriated some more.

These figures are even more important than the income inequality statistics with which everyone is now familiar, because those income statistics alone give the impression that, at the very least, nobody is being made worse off. In addition, wealth is a much better indicator of social and economic power than income, as it shapes individual bargaining power, determines who controls investment, and establishes the distinction between those who are economically secure enough not to have to work, and those who aren’t. Looking at the graph again, a key political point emerges, which we have made before: the problem is not with the 1% alone. The expropriators area larger class than that. After all, the next 4% took just as large a share of the total wealth increase, and overall, the top 20% are doing quite well. To reuse a chart we have used before, the top 20% control 85% of the total wealth in the United States, and if residential wealth were removed (at least, value of primary homes), that would undoubtedly rise much higher.

So the current political obsession with the 1% introduces a very problematic distortion into the actual dynamics of class, and the real distribution of wealth and power, in the current political economy. We are the 99% has a wonderful, quasi-universalist ring, but actually real distinctions under the rug, and implicitly dodges hard conversations about the real class composition of the United States. A real critique would have to reach beyond mere populism.

Interview with Peter Hall

6 Dec

Continuing the series of The Current Moment interviews, today we are publishing an interview with Peter Hall, Krupp Foundation professor of European studies at Harvard University. Peter Hall has published widely in the field of European political economy and comparative politics. His published books can be viewed here. One of his recent papers explores the political origins of the current economic crisis.

 

What are the stories right now that you think people either aren’t paying enough attention to, or about which we have the wrong view?

On this side of the Atlantic, we are mesmerized by the fiscal dimensions of the global economic crisis and not nearly attentive enough to what will be required to ensure the U.S. remains competitive and capable of robust economic growth over the longer term.  Above all, that will require large investments in human capital and public infrastructure, since these are the resources on which all kinds of businesses depend for success.  Despite the efforts of some analysts, such as Michael Spence, and of President Obama himself to argue that, by focusing on these issues, we can address the immediate problem of unemployment and long-term growth together, these issues have not yet become central to public debate.  I wish Americans could see how rapidly China is moving on these fronts and how fruitful such strategies have been in parts of Europe, such as Finland.  We are so obsessed with the short-term, on both economic and electoral fronts, that we are moving far too slowly to lay the basis for renewed growth over the long term.

In Europe, discussion of the Euro crisis is dominated by many myths.  But the one yet to be questioned at all seriously is the myth that deregulating markets in labor and goods so as to intensify competition in them will regenerate growth in the southern European economies.  Such moves are typically described as ‘structural reform’ – a term that has become the mantra of the EU and IMF.  In the long run, structural reform may make some economies more competitive, but to pretend that it will revive economic growth in the short to medium term is an illusion.  Yet this illusion is at the center of most of the plans concocted to revive the southern European economies and resolve the Euro crisis.

For obvious reasons, this is a convenient myth, but it is an empty slogan, all the more pernicious because it diverts attention from the role that government has to play in the revival of economic growth.

Let’s turn to the Eurozone debt problem. The dominant view is that Greeks and Italians are corrupt, inefficient and lazy, and that is why they find themselves in this mess. What is your view of what is going on?

For the most part, this is a canard, encouraged far too quickly by many politicians in northern Europe who reacted to the sovereign debt crisis as if it were an issue of morality rather than a crisis with economic and political foundations that threaten the viability not only of the Euro but of the EU.  Those politicians now realize the full dimensions of the crisis, but their initial reactions has made the task of persuading their electorates to accept measures that might genuinely cope with it much more difficult.

The difficulties from which Greece and Italy are suffering have something to do with problems of political, as well as economic, development.  Both countries would be better off with public institutions less prone to corruption.  But to suggest that that their people are not working hard enough or retiring too early is to misrepresent the problem altogether.  Comparative data suggest that the de facto retirement age is not very different in most of southern Europe than in northern Europe and that the southern European countries have taken just as many steps as those in the north to make their markets more competitive over the past ten years.

The roots of the Euro crisis lie, at a much more basic level, in asymmetries in the organization of the political economies in the north and south of Europe.  In general, as David Soskice and I observed in Varieties of Capitalism (2001), the organization of the political economies of northern Europe gives their firms capacities for wage coordination, skill formation and continuous innovation that suit them well to operate strategies of export-led growth, and EMU provided them with guaranteed markets in the rest of Europe.  By contrast, history has left the southern political economies with fissiparous trade unions and limited capacities for concerted skill formation or continuous innovation.  In the past, they coped with that by operating growth strategies led by domestic demand and then devaluing their currencies to offset the inflationary effects of such strategies on their external competitiveness.  In EMU, they were unable to do that.  Instead, not unreasonably, they took advantage of the cheap credit flowing from northern Europe to promote economic growth.  But, unable to offset the inflationary effects through devaluation, they lost competitive advantage to the north.  The result can be seen in the gross imbalance of payments between the two parts of the Eurozone.

The standard recipe for the recovery from the Eurozone crisis is austerity and structural reforms in the peripheries, plus some recapitalization of banks. Do you think this is the right way to go?

To appreciate the Euro crisis, we have to realize that there are two sides to it.  On the one side, there is the longer term problem of how to devise a structural adjustment path that will restore prosperity to both the south and the north.  On the other side, this is a crisis of confidence, notably in the markets for sovereign debt but spreading over time to the European financial system as a whole.  The European Union has remarkable capacities for muddling through, and, given enough time, I believe it can resolve this long-term problem adequately if not perfectly.  But it is never going to get to the long term if it does not effectively address the immediate crisis of confidence and, as everyone now acknowledges, its efforts to do that over the past year have consistently offered too little, too late.

The immediate crisis is what worries me.  With respect it, there are two issues.  Is there a way for the members of the Eurozone to restore confidence in the markets?  And, if that can be identified, will the member states and the ECB be willing to take the requisite measures.  At this point, I think, as do many others, that the only way to restore confidence in the bond markets is for the ECB to guarantee the sovereign debt of its member states against default, except perhaps for Greece where the markets have already priced in a default.  Various schemes have been mooted whereby the ECB might do this, indirectly if not directly.

The problem is that it will not be easy for the ECB or the member governments to do this.  Mario Draghi and the German government currently oppose such a step.  It is forbidden by Article 123 of the Treaty establishing EMU, and the German Constitutional Court likes to take that Treaty seriously.  The only ray of light here is that the relevant resolution passed by the German CDU at its recent conference does not entirely rule out such a step, describing it as ‘a last resort’.  I think the time for last resorts has come, and I could imagine a deal in which the member governments agree to much stricter enforcement of fiscal targets and long-term support for the ECB in return for a measure of this sort.  However, it is an entirely open question whether the Eurozone governments have the political wherewithal to make this move.  If they do not, I think the crisis of confidence is likely to persist and strengthen until an Italian, Spanish or even Belgian default looms, and then it may be too late to save the Euro.  It takes a confidence trick to resolve a crisis of confidence and the sooner one acts, the less costly the resolution.

What do you think would address the trade and debt imbalances between Northern and Southern Europe? Do you think it can be done within the European monetary order?

This is a question about whether balanced structural adjustment is feasible over the long term within the confines of EMU.  Certainly, the current approach of imposing all the costs of adjustment on southern Europe (of which Ireland can be considered an honorary member) is likely to fail.  Except possibly in Ireland where growth is gradually picking up, there is no reason to expect that rapid enough growth can emerge from such austerity to render the debt load of these countries sustainable.  At a minimum, long-term stability depends on a more coordinated set of fiscal policies in which some reflation in northern Europe is married to a softer adjustment path in southern Europe.  However, this will not be easy to secure.  In particular, as Wendy Carlin and David Soskice have observed, reflation poses risks to the wage coordination on which the northern European economies depend for their competitiveness.

Even then, for reasons I have noted, there is some question about whether the southern European economies can prosper within EMU.  Portugal and Greece, in particular, do not have especially strong export sectors and are not likely to grow them overnight.  These countries have long depended on growth strategies that are accompanied by moderate levels of inflation and, because the ECB has to pursue a monetary policy of one-size for all of Europe, it cannot always dampen down that inflation effectively.  In the wake of the sovereign debt crisis, borrowing costs are likely to remain higher in the south, which will help.  But the danger is that, if the southern European governments cannot pursue growth led by domestic demand for fear of its inflationary consequences, they may experience only low levels of growth for the foreseeable future.  Structural reform will help in the long run but likely only a little.

It may well be that Europe can live with persistent imbalances of payments at some level, but the question is whether more effective coordination of fiscal policies will be enough to allow the southern European economies to grow at rates that are politically acceptable to their electorates.

The hegemony of the demand for austerity is striking. It is offered as the solution to the Eurozone crisis, as well as to the American situation – the US Congress even created a supercommittee to find savings. Yet it seems odd to have such agreement around austerity in the midst of a potential double dip recession. What is wrong with the demand for austerity? How do you account for the strength of this common sense?

The demand for austerity can be explained to some extent by the fact that we have just lived through a period in which financial innovation married to inadequate financial regulation made possible much higher levels of leveraging of assets, leading to higher levels of debt, whether in the public or private sectors of the U.S. and Europe.  To some extent, we are paying today for what we ate yesterday.

The best way to pay back these debts, of course, is from the fruits of more rapid economic growth and that is most likely to be secured, as John Maynard Keynes argued, by reflationary policy. Thus, in the context of global recession immediate austerity does not make good economic sense.

To explain why so many are advocating it, then, we have to recognize that economic policy, whether at the national or international level, is rarely driven entirely by concerns about how to improve overall economic well-being.  It is made by actors, who may be political parties or governments, who are also seeking distributive benefits for their constituents, and, in many cases, these distributive demands are cloaked beneath calls for austerity.  Thus, the demand of several northern European governments, including the Finns and the Dutch as well as the Germans, for austerity in southern Europe is motivated, to a significant extent, by a concern to ensure that they do not pay the costs of adjustment in the wake of the Euro crisis.   I see the demands for austerity of many Republicans in the U.S. as an effort to cut public spending programs that they think serve Democratic rather than Republican constituencies.  If distributive concerns were not at the heart of those demands, those Republicans would be much less reluctant to raise taxes in order to balance the budget.

In the US, there is an influential view that we need to have continued expansionary monetary policy but contractionary fiscal policy. That seems to be the recipe of the moment, with the Fed even contemplating another round of quantitative easing. What do you think of this approach to inadequate demand and balance sheet problems?

As the French would say, I am willing to accept this for lack of something better.  Something better would be a coordinated reflation in which more expansionary fiscal policy was now playing a larger role.  We have arrived at this situation, I think, because central banks, including the Federal Reserve and the ECB, have been willing over the past three years to do what governments have been unwilling or unable to do.  For that, they deserve considerable credit.  One can reasonably ask whether the best way to respond to an era marked by a large expansion in lending is to pump even more money into the system, but, since inflation remains low in most of Europe and North America, partly because the trade unions have been so weakened and unemployment is high, this seems to be an appropriate strategy.  In the absence of a substantial fiscal stimulus to aggregate demand, however, it is unlikely to lower unemployment much.

Debt, especially mortgages and student loans, have become a major issue over the past few years. What if anything do you think should be done about it? How should we understand the growing debt of American households in the past decades?

As Ragurham Rajan and others have pointed out, in the United States, during the 1980s and 1990s, easy consumer credit and home equity loans became a substitute for social policy.  They have been the means ordinary people with little in the way of savings used to survive adverse life events and fluctuations in the economy.  Student loans can be seen, in similar terms, as a substitute for publicly-funded education.

They can also be seen as a key component of the growth model operated in the United States over that period.  Growth in this country was led by domestic demand and the only way to sustain demand in an era when disposable income for households at or below median incomes stagnated was to promote the kind of asset boom in housing that gave many the illusion that their wealth was increasing even if their income was stagnant.

In the past two years, as home prices declined and some forms of credit became harder to secure, American households increased their savings and that, in itself, is gradually reducing the debt burden of the private sector. I do not see any need to take steps to further reduce that debt.  Indeed, it is difficult to see how the American economy can continue to grow without the availability of such credit.

However, there are serious longer-term problems on the horizon.  More than half the American populace has no savings for retirement at a time when larger cohorts can be expected to retire and health-care costs continue to rise exponentially, eating into the disposable income of many families.  Part of the problem is that most of the fruits of economic growth over the past three decades have gone to people in the top 1 percent of the income distribution.  In the long run, the solution will have to entail engineering a more equitable distribution of wealth so that ordinary working families have the means to increase both their savings and their spending.

One thing that seems to tie the American and European situation together is the considerable growth of financial activity. Is there anything to the view that the last decades can be understood as a period of financialization? If so, what does it mean to say the economy has become financialized?

Seen from a long-term perspective, this does indeed look like an era of financialization.  The share of profits in the economy going to the financial sector expanded dramatically.  With the invention of new financial derivatives and the development of financial markets, many firms ostensibly devoted to manufacturing, such as General Motors, have made an increasing share of their profits from financial activities that leverage their capital.  That has contributed, in turn, to rising income inequality at the high end of the distribution, as those skilled at financial engineering generated profits large enough to allow them to demand astronomical levels of compensation.

In my view, it would be an exaggeration to say that the economy has become ‘financialized’.  There are still many productive components of the American economy that do not turn on finance.  However, it is apparent that we are all vulnerable to the systemic risks that a large financial sector, increasingly devoted to speculation, entails, and that is a serious cause for concern.  Although some of the financial innovation of recent decades has made some markets more liquid and borrowing easier for some productive firms, I doubt that this type of ‘casino capitalism’, to borrow a phrase from Susan Strange, ultimately contributes enough to economic prosperity to justify those risks.  We are currently paying serious costs for this and, unless financial regulation becomes more stringent than is currently anticipated, I think there will be more to pay.

Related to that question, what do you think accounts for the ‘bubbliness’ of the US and European economies, and especially the scale of these bubbles? We have seen a number of different bubbles and credit crises – housing bubbles in the US, UK, Ireland, and Spain; sovereign debt events in Greece, Portugal, and Italy, perhaps even France. While there was the dot come bubble in the late 90s, and the East Asian financial crisis, those don’t seem to have had the magnitude and systemic character as the latest period. What is, or isn’t, different about what we’re experiencing now?

I do not believe that any single set of factors can explain these diverse developments.  The housing bubbles can be explained, at least in basic terms, by a long period of easy credit, made possible, as I have noted by the expansion of the financial markets in various kinds of derivatives.  That was made possible, in turn, by what I consider lax financial regulation.  It is ironic that economists liked to describe this period as an era of ‘great moderation’.  In each case, however, some ancillary factors were at work.  In Spain, the cost of borrowing was greatly reduced by the confidence effect associated with entry into EMU.  In Ireland, it was encouraged by rapid rates of economic growth.

The sovereign debt crisis has more complex roots.  In Greece, which enjoyed the same easy access to credit as Spain, the fiscal fecklessness of the government is notable.  In Ireland, some of the problems can be attributed to the government’s mistaken decision to guarantee the bonds of its banks.  In different ways, Portugal, Spain and Italy remained creditworthy on the fundamentals but fell afoul of the spreading crisis of confidence in the markets, which has yet to take its last victims.  There are some parallels with the East Asian financial crisis.  The current crisis is worse partly because it has struck the major financial sectors of the western world and we now face the question of who will rescue those who normally do the rescuing.

How optimistic/pessimistic are you about the ability of national democratic procedures to provide solutions to the current economic crises in Europe and in the US? What do you think of the recent proliferation of technocratic governments in Greece and Italy? Does the current crisis expose some basic tensions between capitalism and democracy? If so, how exactly?

In this as in every other case, as Winston Churchill once said ‘democracy is the worst form of government except for all those other forms that have been tried from time to time’.  The notion that governments led by geriatric Eurocrats will resolve their countries economic problems more readily than elected governments is another of those illusions that bedevil the Eurozone.  They have legitimacy in Brussels but imposing austerity is ultimately a task that demands domestic political legitimacy.  I see this as a stop-gap solution that might, at best, persuade officials in Brussels and Berlin that everything has been tried and they must pay more heed to the pain and demands of national electorates.

It is obvious that the cumbersome decision-making procedures of the European Union are not up to the task of heading off a crisis in the financial markets.  But that is not a problem with democracy.  It is a problem of international negotiation.  Democracy enters the picture to the extent that the views of national electorates limit the willingness of their governments to share the costs of adjustment, and that is admittedly a problem for Europe.  A continent so proud of the ways in which its social policies reflect ‘social solidarity’ has been unable to summon up the sense of continental solidarity that would justify a more equitable and efficient solution to the crisis.  But social solidarity does not simply bubble up from below.  It is created by inventive political leadership and we are still waiting to see if the political leaders of Europe are capable of that.

On the larger question, my view is that the global financial crisis has thrown into stark relief the importance of the state in any democratic system.  The crisis itself is rooted in failures of financial regulation that can be linked to the unwillingness of governments to assert the authority of the state on behalf of the people against powerful financial interests.  And the inadequacy of the response to the crisis, especially in the U.S., can be attributed, in some measure, to the widespread reluctance on the part of many people to trust the state with their resources.  In many respects, that is the legacy of the neo-liberal era that followed the economic crisis of the 1970s, when many policy-makers and citizens became disillusioned with the capacity of governments to direct the economy.  Hence, the American government faces the current crisis hobbled by rising levels of distrust in government.  It is not acting more forcefully on the fiscal front partly because large segments of the American population are willing to vote for politicians who claim that government is the problem rather than the solution.

What are your views of the nascent protests (Occupy Wall Street, Indignados) developing in response to the introduction of austerity packages in Europe and the US? Are these movements a continuation of or a break with the anti-globalization movements of the past? Are they likely to fundamentally change public perceptions and government policy or will they have only a very small lasting impact?

There have been two notable political responses to the current economic crisis.  One is marked by a backlash against immigration, in both the U.S. and Europe, reflected in the growing popularity of radical right parties in Europe and the salience of immigration to national political debates in the United States.  This is a familiar feature of economic crises.  The U.S. has a long history of nativist movements.  The other is reflected in the Occupy Wall Street movement and its European analogues.  I can only hope that the former is contained and the latter encouraged.

It is difficult to see how these sporadic protests can be translated into any immediate changes in policy, not least because they have yet to articulate clear political demands.  However, I think they are having an impact.  They have struck a chord in popular opinion.  They bring issues of unemployment and inequality to the fore.  In the short term, I think that may influence voters in American elections next year, and, over the medium term, I believe that even these limited protests will help to shift political discourse in directions that favor those seeking to address issues of inequality and unemployment.

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