With the belated victory of Kamala Harris as Attorney General, the full results of the 2010 election are in for California. There many things that progressives can be proud of - a sweep of statewide offices, picking up another Assembly seat, defeating prop 23 and passing prop 25. On the other hand, there are also some major disappointments - the defeat of prop 19 (marijuana legalization), the defeat of prop 21 (a VLF to fund the state parks), the defeat of prop 24 (rolling back corporate tax breaks), and the passage of prop 26 (2/3rds requirement for fees). Prop 26 especially complicates what this victory means for California.
Indeed, our situation is a lot like the national picture after the 2008 elections - we have an executive who straddles the line between the left and right wings of the Democratic Party, a big legislative majority, but not the ability to break the fiscal deadlock and really be able to govern our state.
In part 1 of a New Deal for California, I discussed why any effort to rebuild the state must begin with a frontal assault on high unemployment as the only reliable means of achieving budget stability - as opposed to self-defeating quests for balance via austerity. In part 2, I studied how the quest for a more perfect democracy is inextricably linked to a renewal of democratic control over the state's own revenues.
Today, I want to discuss two areas of policy that are among the largest spending categories in the California state budget, but which also represent two faces of the state, and two approaches to developing its youth, and two sets of values - namely, education and prisons.
Arnold's recent proposal to put a floor under higher education at 10% of the state budget and a ceiling over prisons at 7% of the state budget is only the most recent example of a long trend of discussing the two in the same breath. As I discussed in the linked article, Schwarzenegger's approach is fundamentally flawed, a mirage of egalitarianism masking a reality of utter callousness. A moral society cannot pay for the future of its most talented youth through the deliberate immiseration of its least advantaged.
However, a New Deal for California will have to grapple with the reality that California will either educate or incarcerate its young, and that the power to choose lies with us.
In part 1 of “A New Deal for California,” I argued that Democrats needed to put forward a stronger message about what we wanted to do, a larger vision of what Democratic government would mean for the state, beyond the immediate issue of dealing with our structural inability to pass a budget. Both for practical and political reasons, that vision should include the aggressive pursuit of full employment for all Californians.
That’s a good start, but I don’t think a New Deal can stop there, or rest on a fragmented policy-by-policy case for Democratic rule. Rather, I agree with George Lakoff that we should frame our message around the idea that California is experiencing a crisis of democracy. However, I would push further than Lakoff to argue that democracy isn’t just about majority rule – democracy means both a government that does what the people want, and a government that has the ability to do what the people want. California’s problem right now is that we don’t have either.
In the wake of the passage of the Affordable Choices Act into law, there are a lot of questions about how we go on from here. Obviously, one line of activism focuses on ways to improve the health care reform act. To some progressives so morally outraged at the defeat of the public option that they’ve given up on the Congress as hopelessly wedded to corporate interests, obviously, this isn’t so appealing.
However, if the progressive movement can be clever and strategic for a second, and is willing to work from within rather than to cry defeat, we can actually work on the state level to move the goalposts of the health care debate in the direction of single-payer before we even get to the next round of national legislation.
The current state of California politics can be summed up in a simple comparison: in the Republican gubernatorial primaries, we see one candidate promising that their first action upon becoming governor is to put 40,000 people out of work and the other complaining that this isn’t enough; in the Democratic convention, we see a party divided over whether to fight for majority rule for budgets or for budgets and taxes.
As a state, California seems caught between the scissors of an increasing need for public services to provide a basic level of social protection for the sick, the elderly and the poor and to restore our high-road, high-wage economy based on superior public education and green technology, and a paralyzed, undemocratic, and irrational political structure that is unwilling and unable to take the necessary actions to meet those needs.
We know that the strategies proposed by the GOP’s gubernatorial candidates won’t work because they are essentially a retreat of the last seven years of failed policies – Schwarzeneggerism without a human face.
Yet Democrats lack a forceful message about what we want to do beyond the immediate issue of the budget.
(Note: finding precise figures and statistics about Blue Gold is not particularly easy. If my numbers here are off, I will gladly revise the piece)
My previous post about the U.C’s policy towards post-docs and other researchers whetted my interest in the travails of the public university, especially as it deals with the universal budgetary crisis faced by higher education during the recession and the underlying process of privatization faced by many public institutions.
The result is a new mini-series of posts about how to rebuild the public university going forward. And a good place to begin will be to make an important distinction about what isn’t a viable strategy for the renewal of the public university – the much-ballyhooed Blue Gold Opportunity Program that U.C President Marc Yudof has made his calling card.
In part 1 of this series, I discussed the possibility of creating state economic recovery bonds that the Federal government could buy to lend its ability to deficit-spend in recessions to the state governments to counter-act their natural pro-cyclical tendencies. In part 2, I expanded on how we could adapt state governments to Keynesian economic policies by passing anti-recession budget reform initiatives allowing limited deficits during times of economic recession, establishing state banks to provide borrowing capacity for state governments, and establishing state job insurance programs.
So what remains to be done for Keynesian economic policy to be brought to the benefit of state government?
In part 1 of this series, I described how a Job Insurance system could work if it was organized nationally by the Federal government. However, as I suggested in 50 State Keynesianism, Part 2, it is also possible to run job insurance systems on a statewide basis if the Federal government balks at establishing a job insurance system.
Given the severity of the unemployment situation, and the likelihood that even should economic recovery begin in the second quarter and continue unabated that we will have persistent high unemployment, I believe that action on job insurance is necessary regardless of whether the Federal government can act.
This is a more thorough examination of the job insurance concept, done on a national level, but you can easily scale it to California or any other state.
Introduction:
In my previous posts about unemployment insurance reform and 50-state Keynesianism, I made brief reference to something called “job insurance.” Several people requested a fuller explanation, which is only fair considering that I had rather tacked on the idea without fully developing what I meant.
So here is a blueprint for how job insurance is supposed to work, as a major solution to the problem of declining job growth and increasing economic insecurity. To start with, let me explain what job insurance is not – it is not the temporary “transition trade assistance” (inadequate and ill-conceived at the best of times) referred to by most workers as “burial insurance.” It’s not the “wage insurance” that semi-penitent neoliberals have dreamed up to compensate for the fact that the new jobs being created by their post-industrial economic order pay less than the blue collar factory jobs of the past.
What job insurance is, in reality, is the missing link in our Social Security system.
Note: This is a cross-post from my group blog, The Realignment Project, and part 2 in a series about how to bring Keynesian economic policy to the state level.
Introduction:
In this post, I'm returning to a theme I initially explored in June, back when California was grappling with its budget crisis.
Now, after nearly two months of additional struggle, we finally passed a bill that cut $26 billion and raised no new revenue, and now we learn that the governor has possibly illegally cut a further $500 million, taking the axe to children's welfare ($80 million), health care ($400 million), Cal Grants (cut in half), HIV/AIDS Prevention and Treatment ($52 million), and domestic violence shelters (cut by 80%). In addition to the moral insanity of attacking the most vulnerable of our citizens at a time when they are most in need of support one must add the economic insanity of believing that you can reduce government spending by $31 billion in the course of a single year (including both the February and July cuts) and not effect the state's economic recovery.
Lest this be seen as merely a California problem, a recent report by the National Governors Association notes that the collective budget shortfalls of the fifty states comes to a collective $200 billion shortfall. Given that the total Federal economic stimulus for this year only comes to about $400 billion, we are forced to recognize that our system of state government budgeting and finance is creating a massive economic undertow, weakening the impact of Keynesian stimulus by cutting spending and raising taxes (although they've been doing a lot more of the former than the latter).
Note: this a cross-post from my group blog, the Realignment Project.
"Education, then, beyond all other devices of human origin, is the great equalizer of the conditions of men, — the balance-wheel of the social machinery. I do not here mean that it so elevates the moral nature as to make men disdain and abhor the oppression of their fellow-men. This idea pertains to another of its attributes. But I mean that it gives each man the independence and the means by which he can resist the selfishness of other men. It does better than to disarm the poor of their hostility towards the rich: it prevents being poor."
- Horace Mann, 12th Annual Report to the Massachusetts State Board of Education (1848)
In my previous post about education, I mentioned that the education reform debate has largely skirted the problem of affordability of higher education, preferring to direct their attention more towards college preparation and the K-12 system. As I said at the time, one of the things that unsettles me about the "Educational Equality Project" type of education "reformer" is the extreme economistic trend of their thought - education is about getting jobs and making the workforce more production, hence the extreme emphasis on reading, writing, math, and science, as opposed to anything about art and music, or history. I may be overly broad here in my description, and if I am, I apologize, but it's to a point. The purpose of public education is not to meet the needs of the labor market - it is to meet the needs of democracy.
"Unemployment compensation, as we conceive it, is a front line of defense, especially valuable for those who are ordinarily steadily employed, but very beneficial also in maintaining purchasing power. While it will not directly benefit those now unemployed until they are reabsorbed in industry, it should be instituted at the earliest possible date to increase the security of all who are employed..." - Report to the President, Committee on Economic Security (1935)
In a previous post, I discussed the need to improve the payroll tax, and noted that one of the reasons we need to do this is to fix the unemployment insurance (UI). Our current UI system is fundamentally broken. As I wrote on the 12th, "at a time when nearly one in ten American workers are unemployed, only half of them qualify for Unemployment Insurance, to the extent that the program no longer adequately functions either as a safety net or an “automatic stabilizer.”"
If I didn't have the time and the space to say it at the time, let me say it now. The fact that a majority of workers are no longer protected, nearly seventy-five years after the passage of an act that was meant to protect every worker from" one of many misfortunes" of economic life, is a moral failure of the highest order. The idea that governors in America would reject stimulus funds in the middle of a recession because those funds would make it easier for temporary or part time workers to gain access to UI suggests the total moral bankruptcy of the American conservative movement. Not for nothing did FDR say:
"Governments can err, presidents do make mistakes, but the immortal Dante tells us that divine justice weighs the sins of the cold-blooded and the sins of the warm-hearted on different scales. Better the occasional faults of a government that lives in a spirit of charity than the consistent omissions of a government frozen in the ice of its own indifference."
In my last post (and the post before that), I mentioned the importance and difficulty of talking about financial regulation, a task which has been made all the more difficult by an arcane financial products industry that isn't really understood even by its experts.
So in trying to get to grips with this topic, I'm trying to triangulate in on it from different angles - one of which, the idea of a public bank as a yardstick I discussed last week. Today, I'd like to bring up an important point about financial regulation, that the problem we face is three-fold: deregulation, un-regulation, and regulatory capture (and potential incapacity).
As much as some people cling to the idea that the United States has always been a land of anti-government, laissez-faire bustling capitalists, the fact is that the specters of democratic statism haunt the chronicles of American history, all the way from the beginning. One of the oldest and most powerful phantoms is the Bank of the United States that died and was reborn, again and again through the history of American politics like the immortal monsters of slasher horror films.
Because the Bank was there from the beginning – Hamilton drafted it, Washington signed it, and Adams maintained it. Even when the anti-central government Democrats took possession of the Presidency in 1800, Jefferson maintained the Bank and Madison actively promoted it (due to the support of Albert Gallatin (the Secretary of the Treasury and a Democratic-Republican who had begun to learn the virtues of Federal activism in such matters as the Bank and Federally-funded public works). The Second Bank of the United States was established in an era of Democratic-Republican dominance, suggesting that the Bank of the United States had a rough political consensus between 1800-1832. Now, two caveats should be made – first, that the original bank was a public/private venture, and second, that the Bank was highly politically controversial, leading to thirty years of Jacksonian decentralized state banks – but the larger point remains that the Federal government of the Revolutionary Generation was not some libertarian paradise of limited government that left the economy to laissez faire.
The second half of the 19th century saw an enormous explosion of central banking. The Civil War gave us the Second Banking System, whereby the Republican Party, strong nationalists that they were, created for the first time a single, national, paper currency, a system of national banks with reserve requirements (held in Treasury securities), regulated by the Comptroller of the Currency. When this system began to fail (largely due to the requirement to back all notes with Treasuries and the lack of a lender of last resort, as well as the restrictive monetary policy of the era), the Federal Reserve was called into being. However, what few people realize is that the public-private nature of the Fed was the result of a political bargain struck between conservative Republicans like Nelson Aldrich (who wanted a 100% private Fed), Progressives (who wanted a 100% public Fed), and conservative Democrats (who wanted a decentralized and private Fed).
This was not a single grand vision, but a messy compromise, and there remains in the history books, the vision of a Fed that might (and should) have been, a People’s Bank exercising political authority over the economy.
In the spirit of the best 4th of July speeches, which like Frederick Douglass' peerless effort seek not to satiate with platitudes but rather to challenge and provoke, today I offer a reflection on America's past and its future.
At the end of "Resurrecting Henry George," I argued that a national housing assistance program would "help to make one more of FDR’s Second Bill of Rights, "the right of every family to a decent home," a legal reality. I would argue, and I will argue in future posts, that the longer-term mission of the progressive movement in America is (and has unconsciously been) the realization of the Second Bill of Rights." So today I intend to explain what I meant.
Note: This is a cross post from my group blog, The Reaklignment Project, and a followup to the previous post on housing policy.
The savage beasts in Italy have their particular dens, they have their places of repose and refuge; but the men who bear arms, and expose their lives for the safety of their country, enjoy in the meantime nothing more in it but the air and the light.They fought indeed and were slain, but it was to maintain the luxury and wealth of other men.They were styled the masters of the world, but in the meantime had not one foot of ground which they could call their own.” (Tiberius Sempronius Gracchus, 133 BCE)
“The equal right of all men to the use of land is as clear as their equal right to breathe the air–it is a right proclaimed by the fact of their existence. For we cannot suppose that some men have a right to be in this world, and others no right.” (Henry George, 1879)
One of the truisms of studying social policy is the phrase “programs for poor people make poor programs.” Programs targeted at poor people (Aid to Families with Dependent Children (AFDC) or “welfare” being the best example) tend to be underfunded, provide inadequate levels of benefits, have onerous application requirements, are socially stigmatizing, and are politically vulnerable to assault from the right. By contrast, programs that are universal in nature, including both the poor, the working class, the middle class, and maybe even the affluent, (here, the best examples are Social Security and Medicare) tend to well-funded, provide decent benefits, where eligibility is on the basis of tights, are socially approved of, and are politically inviolate from the right.
That’s one of the reasons why I’ve argued that the premium subsidy is actually one of the most politically important parts of the current health care reform legislation. By creating a national and universal benefit that everyone shares in by right, the current legislation would create a “community of interest” that includes the poor, the working class, and the middle class – which would no doubt approve of the bill, and in the future vote for people who promise to improve and extend universal health care and vote against people who want to decrease or eliminate their premium subsidy.
“O reason not the need! Our basest beggars Are in the poorest thing superfluous. Allow not nature more than nature needs, Man’s life is as cheap as beast’s.” (Lear, II iv)
The Problem:
If there is any one area of American life that best expresses the adage “poverty in the midst of prosperity,” it must be housing. Even as thousands upon thousands of homes now stand empty, vast swathes of speculative suburban developments along the highways and hills of California turned into ghost towns, homelessness has increased. In Washington D.C, the number of homeless families has increased in the last year by 15%, with similar figures being reported in New York City and other metropolitan centers. Even when the sub-prime boom was spreading home-ownership wide and far and actually beginning to make headway against the unequal distribution of housing in America, in 2006, 8.8 million households were paying more than half their income in rent (I was probably one of them). Major systemic problems (the lack of affordable housing and workforce housing near where people work, the need to in-fill versus sprawl, racial and class discrimination) were not being addressed, even when the market was flush.
It isn’t flush now. If ever there was a need for proof that “spatial mismatch” and “credit discrimination” exist, we can find it in the fact that at a time when thousands of houses are empty rotting shells, that people who want and need housing are being turned away by banks who have suddenly become paragons of fiscal rectitude.
At the same time, the national unemployment rate currently stands at 9.4%. Within the construction industry, unemployment stands at 21%. Within California, the situation is even worse, with an overall unemployment rate of 11.5%, and a construction industry that’s down 150,000 jobs from last year. While I fully expect that the stimulative effect of the American Recovery and Reinvestment Act of 2009 will begin to ameliorate this situation within the next six months, I personally was calling for an even larger jobs bill at the time.
I think we can tackle both problems at the same time.
Yesterday, the Economic Policy Institute held an event, co-sponsored by the “Broader, Bolder” education reform group, on reforming No Child Left Behind. This fact was commented on in a post on Crooked Timber, and within eight poss, you could read that ” The goal of NCLB was not to improve education, it was to destroy the teacher’s unions and take away the hard won rights including tenure and the ability to act as professionals…One group sees education as a way to instruct the young with the essentials of the society and turn them into docile citizens who will provide the workforce and consumer base that the elite depends upon. This group favors an authoritarian, top down, approach to instruction,” and “the “Broader, Bolder Coalition”—whose manifesto openly embraces using education policy as a stalking horse for a broad political agenda…has little to do with educational standards.”
And there, in a microcosm, is the state of our current education reform debate: one group, loosely grouped around the “Broader, Bolder” coalition, and another group, loosely grouped around the Education Equality Project and they hate each other worse than Communists hate Trotskyists, and with the same sectarian flair. Apparently the Broader, Bolder folks are either your standard left-of-center education policy wonks and activists who emphasize the need to tackle the social environment of schools or a stalking horse for the teachers unions out to destroy education reform. Likewise, the Educational Equality Project people are either a very similar group of wonks who focus on the achievement gap between white students and students of color, or a neoliberal plot to destroy teachers unions, force students into becoming standardized-tested drones, and privatize the public education system. Oh, and they’re both the only true “reformers.”
