Bob Schwartz

Category: Economics

The Other Poverty: The Poverty of Ideas

The other poverty is the poverty of ideas.

Let us ask each of our leaders and politicians for just one relatively new and interesting idea to solve a pressing problem. Just one. It doesn’t have to be an idea that has won substantial support or that has achieved broad consensus. In fact it can’t be that. Instead it should be something that is just a little bit out there, the kind that might elicit a “you must be kidding” or “that will never pass” or “that will never work.”

What we mostly have is problem solving that borders on archival monomania, the single idea with ancient lineage that fits a particular purpose or ideology—but has not really demonstrated an ability to solve particular problems.

This morning Sen. Dean Heller of Nevada explained why he is one of the few Republicans supporting an extension of unemployment benefits. In the course of the interview, he said that the biggest problem was jobs. He then ticked off the number one conservative solution—tax reform—but when he got to the second idea, it came out sounding like “something else” without a single detail. That’s because leaders and politicians on both sides of the aisle are stumped, which they admittedly should be by the unique and unprecedented economic moment we are living through.

During the 2012 presidential campaign, Newt Gingrich was roundly derided for his suggestion that we mine the Moon and colonize Mars. There are plenty of reasons that Newt wasn’t and isn’t a good choice for President, but that isn’t one of them. Sure it’s a bit science fictionish, but then so is practically all of the current tech that is one of the only bright spots in the global economy. Can you imagine a U.S. Senator in the 1950s coming to the floor of the Senate brandishing a copy of that weekend’s Sunday funnies, pointing to Dick Tracy and saying “That wrist radio, gentlemen, is where we should be heading.”? China and India are racing to the Moon, and it is not for the view.

Politics and political leadership are inherently conservative, in the sense that maintaining the institution and its support seems to demand modest, slow, incremental change—if any change at all. That’s where party lines and sticking to scripts come from. An intolerance for innovation and fringe philosophy go with that. We shouldn’t be asking parties or politicians to give up core principles and precepts. But if we actually want to solve problems, and not just hear tired old nostrums that won’t do any good, then we have to make a safe place for innovation, one where thinkers who happen to be in office are not committing political suicide by offering something interesting and maybe even eccentric. Because until we ask our politicians to enrich us with new ideas and not empty platitudes and happy talk, more of us will be unhappy with increasingly empty pockets.

Online Gambling and Real Life Guns: It’s About The Children

A team of highly-paid ex-politico lobbyists are out there arguing against proposed bills in Congress to allow Internet gambling. Under one of these bills, a 12% tax would be shared between the federal and state governments, 4% and 8% respectively. That would be a lot of revenue in these hard times.

Gambling is an American and ancient tradition. Lotteries helped fund the American Revolution, which makes them practically sacred. In this case, the main opponents of digital gaming for money are the wealthy owners of real-world casinos and establishments, most visibly billionaire Sheldon Adelson, who helped bankroll Mitt Romney’s quest for the Presidency. No surprise there. The practice of online gaming, which already goes on with offshore sites, would expand dramatically, leaving bricks, mortar and showgirl spots with a severely reduced market.

Some of the arguments against the bills are, on their own terms, not entirely unpersuasive. Gambling does support hospitality and tourism, and if the already declining dollars drop further, there are going to be folks who lose their jobs in this challenged economy. It’s not clear that the entrepreneurs getting rich off this have the will and creativity to come up with substitute businesses that would replace those jobs. Gambling is also already a social problem, damaging lives and families, and what is bad gets worse with increased volume. The final big argument is, naturally, about “the children.” No matter what we try to do, the online environment is notoriously freewheeling, and there is no question that underage players would find a way to play, just as they get cigarettes and alcohol.

On the tourism question, cultural and social trends have always left some forms of entertainment and diversion behind while other new or more appealing ones prospered. Either you believe overall in the free market or not. People who say that government shouldn’t be picking winners and losers shouldn’t be telling the government to pick winners and losers.

Out of control gambling can be pernicious, no doubt about it. But the argument, one actually made, that the poorest in society would be unfairly burdened by the attraction of online gambling is under current realities absurd. First, because it is not clear that all the opponents of online gambling care so very much for the lower tiers of American society. Second, because government already endorses, promotes and profits from easy-access gambling that does weigh on the most vulnerable—the lotteries. With all the strains on government budgets, it is unimaginable what state some states would be in without those gaming dollars.

Then there is the ultimate trump card: the children. That score is easy to answer. On the scale of things kids shouldn’t be allowed to do, alcohol is number 2, tobacco is a close number 3, and then comes gambling. Number 1 is easy. Children should not have guns, should not live in an environment where guns are widely available and acceptable, and where guns are regularly used to shoot, injure and kill innocent people—including children.

So if you happen to see or hear any of those lobbyists shilling for Sheldon Adelson and his ilk, talking about how it is about “the children” and how we must protect them from the evils of playing online poker or placing a digital bet on an NFL game, ask them if guns aren’t a tad more dangerous, and ask them what they’ve done to seriously reduce the ubiquity of those guns and to eliminate the personal and social costs that those guns have inflicted on all of us.

There likely won’t be a good answer, at least not one that isn’t laced with equivocation, hypocrisy and protests of irrelevancy. It is relevant. Ask them to put the two side by side, the harm to children from online gambling and from guns, and tell them that the billionaires are free to make billions more on their casinos—just as soon as the guns get put away.

Un-Americans in Congress

Capitol Flag
The first appearance of un-Americanism came during the American Revolution. Conservative colonists who remained loyal to the British crown were reviled by those who pledged their fortunes to a new and forward-looking vision. To the Patriots, the Loyalists were backward-looking un-Americans—even though “America” was not quite yet a reality.

The next appearance came during the Civil War. This time, a powerful portion of American citizens and leaders made philosophical and economic arguments that being a “real American” meant having the freedom to own people as property and, if that was taken away, the freedom to split the nation. Many other Americans disagreed, and in a war that took 620,000 lives, having a united nation and government was established as the bedrock of Americanism. Disagree and fight vigorously to change policy and direction, but when your initiatives threaten the integrity of that union, your Americanism is in question or even forfeited.

Right now, Republican members of Congress are on track to bring parts of the American government to a standstill, and probably damage a still-unstable American economy. This is un-American. Pointing fingers and trying to avoid accountability is childish; at least take credit or blame if the principles are so important. We need adult Americans. What we seem to be getting in some quarters are childish un-Americans. Nothing could be more sad or dangerous.

Labor Day 2013

ILGWU - Yiddish, Italian, English
In talking about the labor movement, there are reasons to be encouraging and critical.

I grew up in a union household. My grandfather was an immigrant who joined and trained in the International Ladies Garment Workers Union (ILGWU), famous for its “Look for the union label” song. I keep his union card handy in my desk.

The contributions of unions to American life, to the creation of a huge middle class, are beyond debate. Whatever you think of unions today, the labor movement helped make America.

Any critical comments will be taken as ammunition by those who oppose unions reflexively as an un-American scourge on our economy and way of life. Some of these people would not only eliminate the labor movement from present day America, but would be pleased to go back in a time machine and wipe it from history. There is little doubt that if this could somehow be accomplished, America might look like Czarist Russia or some other unbalanced and benighted society.

Those are the caveats. Here is the current situation.

Organized labor is disappearing from American life. Union membership as a percentage of the work force was 35% in the 1950s; it now hovers around 11% and is still dropping. The relentless push for right to work laws goes on, but even without that, the numbers may not rise, and may continue to decline.

It doesn’t matter how it got like this. There are plenty of rear view mirror analyses, including things like admitted abuses and overreaching, along with a shortsighted sense that the party would never end. For a lot of workers, union and otherwise, the party is over.

This, however, is not the end of the story. A heroic effort to re-imagine and re-vision unions and the labor movement can take place. This is going to take brutal self-examination and, as is implied, imagination and vision. Unions can evaluate who they are and who they can be in the context of 2013 and beyond—including being a centerpiece for progressive change. But with that, unions must also figure out who they can’t be and shouldn’t be. This is where having eyes wide open comes in. It is also where courage comes in and defensiveness must go out.

The idea that agents of progress look the same in every age is patently untrue. It is one of the traps of progressive movements, thinking that who and what worked a century ago or a few decades ago will work forever. It won’t. But there is something that will. Creating that something doesn’t begin by blaming the enemies, though enemies there be. It begins by admitting that there is a problem making unions fit in with current America, and an opportunity to create a labor movement that does.

There are Labor Day cakes in the local supermarket, decorated with American flags. The stores probably didn’t mean that Labor Day is the patriotic, all-American equivalent of Independence Day. Last night the local country club exploded Labor Day fireworks. That probably isn’t a political or economic statement. So maybe, as organized labor gets to work trying to figure out what exactly a 2013 movement looks like, it might start with the simple task of putting the “labor” back in Labor Day.

The Iraq War and the Ryan Budget: A Modest Proposal

Paul Ryan Budget
We have two budget crises. One is the budget itself, which is clearly in need of work to make concrete our priorities and the willingness of citizens to support those priorities in the form of taxes. The second crisis is political dysfunction, where real and constructive talk about those priorities and that support is transformed and devolved into useless politalk. One way that uselessness is hidden is by obfuscation and throwing around lots of numbers, details, and core American principles.

Simplify, simplify.

We just marked the 10th anniversary of the Iraq War. There is going to be disagreement about many aspects of that war for generations.

But there is consensus on two things.

The war was financially expensive. How expensive is another matter of contention. The Costs of War Project pegs it at a few trillion dollars, give or take. So how expensive? Very expensive.

The war was not paid for. More precisely, the war was paid for by debt, not by taxes. The United States had never done this before. There are two perfectly good reasons to ask Americans to pay for and sacrifice for wars. Wars are expensive. And taxing for war asks all citizens at all economic levels to make real sacrifice, even if they or their loved ones are not in harm’s way. As a political matter, when the sacrifice outweighs support for the war, there may be pressure to question or even end the war.

It is uncontested that George W. Bush and Congress did not ask for that sacrifice. Without arguing about how that happened, it is the fact. There is no argument about the result. In the midst of this massive borrowing to pay for the war, the economy fell down, and is still having trouble getting up.

With a sense of humility, and standing in the shadow of today’s esteemed Congress, here is a simple and modest proposal.

1. Agree on the financial cost of the Iraq War. For purposes of discussion, let’s say $3 trillion, though it is certainly more.

2. Agree to taxes that will generate that amount of revenue, not a cent more or less. That revenue would then be spent on all the important things that would otherwise be underfunded or unfunded, including every possible entitlement for veterans.

3. Once that money is raised and spent, taxes will revert to the earlier levels, and some members of Congress can go back to babbling, bickering and posturing.

Simple, maybe even naïve. Certainly too naive for the sophisticated politicians who are busy building a budgetary hall of mirrors that only they can navigate, where they think they can hide themselves and some simple, inconvenient truths.

The Tin Anniversary of the Iraq War

Tin CupTin is the traditional gift to mark a 10th wedding anniversary, just as it is silver for the 25th and gold for the 50th. There is no tradition about the anniversaries of wars, so tin will have to do.

All wars are controversial, whatever the split in support (80/20, 20/80, 50/50, rarely true 100% support), whatever the rationale, whatever the price. Every American war has had its naysayers, contemporary with combat and in the rear view mirror of history. World War II came close to consensus, although even there questions are still raised about whether we were late getting in and whether the unprecedented brutal way we got out was necessary.

This paragraph was going to include a bunch of numbers about the Iraq War. But you are going to find those numbers everywhere: how many of our personnel served, how many were killed and wounded, how many civilians were killed and wounded, how much it cost in dollars. Those numbers are meant to demonstrate the price paid, in, as they say, blood and treasure. Here it is in brief: the price was staggeringly high.

And next is something surprisingly good to say about the Vietnam War. If we learned nothing else from that nation-dividing conflict, we learned this: whatever we believe about a war, we can never, ever, ever take anything away from the service of those who fight.

Some people miss an important point when they argue that we have to justify a war after the fact so that those who suffered won’t have suffered “in vain”. It is the exact opposite. When a war turns out in hindsight to present real questions about why, those who fought are maybe more our most loyal heroes, especially in a volunteer army. They didn’t answer a call to defeat some cosmic embodiment of evil (e.g., Hitler); they just loyally answered a call to serve. They deserve all we can give them (which, by the way, includes world-class medical care).

In August 2002 I sent an e-mail to some U.S. Senators, including Bob Graham of Florida and Robert Byrd of West Virginia. Both of them were skeptical about the rush to war, and both—particularly Byrd—believed that the role of Congress was being ignored.

This is an excerpt from that e-mail It is not here to reveal some astute analysis or prescience. Lots of people knew or suspected that something was wrong. It is just here as an artifact of a moment that led us to the anniversary today.

Sent August 29, 2002

Congress has the constitutional power to make war, which includes careful deliberation and action if necessary.

In the case of Iraq, you and Congress should assert that power immediately and clearly. Congress has previously allowed that power to erode in the face of political pressure, and now faces an administration that is using an atmosphere of fear (that it has intentionally or inadvertently helped create) to dare Congress to defy its claimed authority.

When you do exercise that power, as I hope you will, it should be more than a rubber stamp. The President seems to have a simplistic and maybe, with all due respect, a simple-minded view of world affairs. The role he is carving out for the U.S. as the world’s sheriff may be right in a moral sense, but is possibly disastrous in the world of the 21st century. Which evildoer is next on the list; which town is he planning to clean up?

This isn’t High Noon or The Magnificent Seven. We have been lucky in Afghanistan, though I expect things will fall apart there within the next year or so. The destabilization of Iraq, especially in the face of global disdain for our actions, could be much more costly.

Finally, I believe that the President’s strange game of hide-the-ball regarding his plans for Iraq (in the guise of not telegraphing our strategy) is wreaking havoc with our economic confidence. Anybody with any economic insight knows that things are much worse than anyone is willing to talk about, restraining such talk in the hope that consumers and businesses will regain lost faith in the future. There is no way that an attack on Iraq can help that situation, and a thousand ways it can and will hurt.

For the record, when the Iraq War Resolution did pass Congress in October 2002, Byrd, Graham and a total of 23 Senators (21 Democrats, 1 Republican, 1 Independent) voted against it. Of those, only a handful are still in the Senate: Barbara Boxer, Dick Durbin, Carl Levin, Barbara Mikulski, Patty Murray, Jack Reed, Debbie Stabenow and Ron Wyden. It has been more than ten years, so choice and death have taken the rest of them. One who did vote for it who is no longer in the Senate is John Kerry, who became Secretary of State after the “official” end of the Iraq War, and who, between the vote for the war and the end of it, ran for President.

It’s a funny old world.

John Boehner and the Judgment of History

John Boehner
John Boehner says he isn’t worried that compromising on taxes will result in his losing his job as House Speaker. It is a matter of principle.

He may be telling the truth, but it doesn’t matter.

When asked whether Americans will blame the Republicans for the stalemate, his answer isn’t that he doesn’t care, but that it would be wrong. President Obama and the Democrats are to blame, even if polls say that many people believe otherwise.

That doesn’t matter either.

The question isn’t whether Boehner cares about keeping his job (which he does) or whether he cares that many Americans blame him and the Republicans (which he does).

The question is about history.

Republicans have for quite a while seemed to be unconcerned about the judgment of history. There’s a practical reason for this: people vote, not history. And most people aren’t that interested in history. Anyway, history is often equivocal, so in those moments when people do care, history can be spun to say almost anything.

But, for example, history continues to be a problem for the Republicans and their most historic President. The principles of and lessons from Lincoln are not always congruent with current GOP practice and rhetoric. This is how Southern Republicans during the Civil Rights era didn’t just come to distance themselves from the Great Emancipator; they fled the party.

History is turning on the Republicans. An entire two-term Presidency—eight years of George W. Bush—has had to be nearly buried so that the party could move on. The most recent financial misstep, the 2011 debt ceiling debacle, looked at first like it could be blamed on an ineffectual President. But history has stepped in. Obama’s leadership has been established and electorally endorsed, And now that event looks like a dark mirror of this moment—a mirror featuring John Boehner’s face.

When the movie of this moment is made, the question for Boehner is who he wants to be. He’s not going to be Lincoln, he’s not going to be Thaddeus Stevens. The way it looks now, he may be one of those supporting characters, a middling Congressional leader serving as an antagonist, helping to move the action along by opposing it. He is a decent man, he may yet keep his Speakership, and the country may yet, hopefully, avoid another crisis. But history won’t care about any of that. It is ruthless in its judgment, and John Boehner still has time to sway it.

Republicans and the Heroism of Doing the Right Thing

Sir Walter Raeligh
Most of the time, there are no medals for doing the right thing. Holding open a door for someone whose arms are laden with packages is just a civil idea. Laying down your cloak so that the Queen doesn’t get her feet wet probably earns you some bonus points (and a dirty cloak), but it’s not exactly heroic.

It’s now clear that at this moment, the right thing to do about the fiscal [precipice you can fall from] is to extend tax cuts for all but the highest incomes, and have the just-elected new Congress come back in a month to do the hard work of reaching a long term solution. Who knows? Maybe that Congress will find a way to maintain lower tax rates for incomes above $250,000, along with carefully considered spending cuts and overall tax reform.

Republicans and their leaders find themselves caught between irreconcilable considerations. Among them is not just the past election but the evidence that, more than not, they will be blamed if no agreement is reached. Pulling another direction is an absolutist and ideological demand that anything looking like a tax increase is almost literally profane.

In spite of that, there are reports that at least some Republicans are in the mood to make that tax deal—maybe because of realpolitik, but maybe because it is the right thing. Either way, there seems to be some fear in the party that those Republicans will be seen as weak and capitulating to the President and the Democrats. That is one of the last cards that hardliners will play.

Those sensible Republicans shouldn’t worry. They will be seen as heroes by many Americans. That’s one of the dynamics going on right now. Some Republicans are worried about being on the wrong side of demographics and national electoral politics, and they should be. It’s worse, though it takes a bit more vision, to see that you might be on the wrong side of history.

Somewhere in between is being on the wrong side of heroism. Not being a hero is not equivalent to being a coward. Standing by and letting the wrong, or at least not optimal, thing happen is not universally indictable. But nothing beats being hero. Here’s another chance.

Citizens United Lives: Money Will Still Buy Elections

Thomas Nast
In the aftermath of the election, a certain joyous complacency has set in regarding Citizens United and the impact of Big Money on the electoral process. A derisive attitude of “epic fail” has attached to Sheldon Adelson, Karl Rove and all the others who seemingly wasted their billions (or other people’s billions) on influencing the results. Some have wondered out loud about how much real good those billions would have done for a country and world in need.

In fact, the money was merely mismanaged, channeled into outdated and ineffective strategies, and thereby wasted. But that will not last. There are plenty of talented operatives and strategists out there, even now working on better ways to address electoral problems using modern means. Yes, they are outnumbered by old school consultants relying on some combination of charm, reputation and useless technique, but like the blind squirrels, even Big Money will find the acorns sometimes.

And when the billionaires do find the operatives working on the cutting edge of 21st century electoral influence, what many feared would happen in the 2012 election—but didn’t—will eventually happen. Elections will be bought, even on behalf of those candidates who appear to some as unqualified and even clownish.

It’s time to stop laughing at Karl Rove’s misfortunes and start doubling up on the efforts to neutralize the impact of Citizens United. Proposals are out there, ranging from enhanced disclosure to a constitutional amendment. Whatever the approach, pursue it now. It’s the only way to avoid the Wednesday morning in November we didn’t have, the one where we wake up shaking our heads and asking: How in the world did that happen?

Black Friday

The shopping day after Thanksgiving, Black Friday is so named because for retailers, it can mean the difference between loss and profit–being in the black.

Like it or not, the Christmas shopping season is an important contributor to this consumer economy. But the term is an overwhelmingly bleak one, particularly in relation to Christmas. In all other contexts, Black Friday is historically associated with financial crises, weather disasters, fires, military attacks and massacres. Rather than concerning Christmas and the birth of Jesus, the death of Jesus is marked by what is called Good Friday–also known as Black Friday.

And then there is the 1940 horror movie (see above)…