Month: April 2019

America’s Economy Is Unsustainable

The biggest economic story of our times isn’t about supply and demand. It’s about institutions and politics. It’s about power.

The median annual earnings of full-time wage and salaried workers in 1979, in today’s dollars, was $43,680. The median earnings in 2018 was $45,708. If from 1979 to 2018, the American economy almost tripled in size, so where did the gains go?  Most went to the top.

Now this is broadly known, but there is less certainty about why.

1. The conventional view. 

Conventional wisdom attributes the widening economic divide to globalization and technological change–the “inevitable” result of the invisible hand of the so-called “free market.”

Simply put, as the American economy merged with the rest of the globe, American workers had to compete with foreign workers willing to toil for a fraction of American wages. And as technology advanced, American workers also had to compete with software and robots that were cheaper to employ than Americans.

So, according to this conventional view, the only realistic way to raise the wages of most Americans is to give them more and better education and job training, so they can become more competitive. They can thereby overcome the so-called “skills gap” that keeps them from taking the jobs of the future–jobs and opportunities generated by new technologies.

2.  A deeper view of the American political economy.

The conventional story isn’t completely wrong, and education and training are important. But the conventional view leaves out some of the largest and most important changes, and therefore overlooks the most important solutions.

To understand what really happened, it’s critical to understand that there is no “free market” in nature. The term “free market” suggests outcomes are objectively fair and that any “intervention” in the free market is somehow “unnatural.” But in reality, markets cannot exist without people constructing them. Markets depend on rules, and rules come out of legislatures, executive agencies, and courts.  The biggest political change over the last four decades is the overwhelming dominance of big money in politics – influencing what those rules are to be.

3. The decline of countervailing power.

Now, go back to the first three decades after World War II – a period that coupled the greatest economic expansion the world has ever seen with the creation of the largest middle class the world has ever witnessed. The great economic thinker John Kenneth Galbraith asked at the time: Why is capitalism working so well for so many?

His answer was as surprising as it was obvious: American capitalism contained hidden pools of what he called “countervailing power” that offset the power of large corporations, Wall Street, and the wealthy: labor unions, state and local banks, farm cooperatives, and small retail chains, for example. All of these sources of countervailing power had been fostered by the New Deal. They balanced the American economic system.

But since the late 1970s, these sources of countervailing power have been decimated, leading to an unbalanced system and producing widening economic inequality and stagnating wages. The result has become a vicious cycle in which big money–emanating from big corporations, Wall Street, and the wealthy – determine the rules of the economic game, and those rules generate more money at the top.

Consider, for example, the ever-expanding tax cuts or loopholes for large corporations, the financial sector, and the wealthy. Contrast them with increases in payroll taxes for average workers.

Or look at the bank and corporate bailouts but little or no help for homeowners caught in the downdraft of the Great Recession.

Finally, look at the increasing barriers to labor unions, such as the proliferation of so-called “right-to-work” laws and the simultaneous erosion of antitrust and the emergence of large concentrations of corporate power.

The public knows the game is rigged, which is why almost all the political energy is now anti-establishment. This is a big reason why Trump won the 2016 election. Authoritarian populists through history have used anger and directed it at racial and ethnic minorities and foreigners.

It’s also a big reason why the only alternative to authoritarian populism is progressive populism – countervailing the moneyed interests with a democracy that reorganizes the market to benefit the many rather than a small group at the top.

How do we build a new countervailing power and move toward a new progressive economics?

4. Economics and political power.

The choice isn’t between a free market and government. The question is who has the power to organize the market, and for whom.

Stagnant wages, job insecurity, widening inequality, and mounting wealth at the top are the result of political choices. The system is rigged and must be un-rigged.

Conventional economics posits that the most important goals are efficiency and economic growth. But policies can be “efficient” by making the rich even wealthier as long as no one else is worse off – and that won’t remedy what’s happened. Economic growth is meaningless if the gains from growth keep going to the top and nothing trickles down.

Stop assuming that all that’s needed is better education and job training. Sure, Americans need access to better schools and skills, but the basic problem isn’t simply a “skills gap.” It’s a market that’s organized to push more income and wealth toward the top, rather than distribute it broadly.

Stop aiming to “redistribute” from richer to poorer after the market has distributed income. Instead, change the organization of the market so that a fair pre-distribution occurs inside it.

Stop thinking that the goal is only to create more jobs. America’s real jobs crisis is a scarcity of good jobs.

The American economy cannot generate widespread prosperity without a large and growing middle class whose spending fuels the economy.

5. Building a Multi-Racial, Multi-Ethnic Coalition of the Middle Class, Working Class and Poor.

Don’t let the moneyed interests divide and conquer along racial and gender lines. Racism and sexism are very real issues within our economic system, and they are often exploited to keep us from realizing the power we can have when we stand together. All are disempowered by the moneyed interests, and all have a stake in rebuilding countervailing power.

6. Offering a compelling set of ideas about what should be done with countervailing power.

For example:


7. Building the leadership for this new countervailing power.

You can help lead the way. You can be a leader of this movement. How?

For one, you can run for office – in your community, say, city council or school board. Or run for state office. Or even national office.

Don’t be intimidated by politics. We need good people to run. And don’t worry that you’ll be beholden to a handful of rich donors. These days, smaller donors are more active than ever.

So, what’s the secret? Tell it like it is and be yourself. And then, as I’ve said, talk about economics in terms of political power and understand the 7 principles. Build countervailing power through a multi-racial, multi-ethnic coalition. And offer a compelling set of ideas about what can and should be done.

But you don’t need to hold formal office to be a leader.

You can be a leader by organizing and mobilizing people: Your co-workers – to form a union. Your friends and neighbors – to push for better roads and schools, and fairer local taxes. People at your church or synagogue or mosque – to demand better treatment of the poor, the elderly, children, immigrants. You can link your group up with other groups pursuing similar ends, and create a movement. That’s how we got the Civil Rights and Voting Rights Acts. How we got marriage equality. It’s how we get good people elected.

The key to organizing and mobilizing is creating a leadership team, and then reaching out systematically to others, giving them tasks and responsibilities, starting small and gaining a few victories so people can feel their power, and then growing from there.

You’ll need to be patient and steadfast. Keep people together and focused. And be careful not to burn out. Organizing and mobilizing is hard, but once organized and mobilized, there’s no end to what people can accomplish.

You can also be a leader by uncovering critical information, fighting lies, spreading the truth. Core responsibilities of leadership are revealing the facts about widening inequalities of income, wealth, and political power – and uncovering their consequences.

A century ago they were called “muckrakers.” More recently, investigative reporters. I’m talking about courageous journalists who speak truth to power.

But this form of leadership isn’t limited to reporters. It includes whistleblowers, who alert the public to abuses of power. And here courage is also required because when you blow the whistle on the powerful, the powerful sometimes strike back.

This form of leadership also includes researchers, who dig up new sources of data and analyze them in ways that enlighten and motivate.

In other words, there isn’t just one path to leadership. Whether you seek formal authority by running and gaining public office, or you organize and mobilize people into being effective advocates, or you discover and spread the truth – you are creating and developing countervailing power to spread the gains of the economy and strengthen our democracy.

These are worthy and noble objectives. They are worth your time. They can be worth a lifetime.

It’s Time For Nations To Unite Around An International Green New Deal

In times of crisis and catastrophe, children are often forced to grow up quickly. We are now witnessing this premature call to action on a planetary scale. As the adults in government accelerate their consumption of fossil fuels, children are leading the campaign against our species’ looming extinction. Our survival now depends on the prospects for a global movement to follow their lead and demand an International Green New Deal.

Several countries have proposed their own versions of a Green New Deal. Here in Europe, DiEM25 and our European Spring coalition are campaigning under the banner of a detailed Green New Deal agenda. In the UK, a new campaign is pushing similar legislation with MPs such as Caroline Lucas and Clive Lewis. And in the US, dogged activists in the Sunrise Movement are working with representatives such as Alexandria Ocasio-Cortez to push their proposal to the front of the political agenda.

But these campaigns have largely remained siloed. Their advisers may exchange notes and ideas, but no strategy has emerged to coordinate these campaigns in a broader, global framework.

Unfortunately, climate change knows no borders. The US may be the second-largest polluter in the world, but it makes up less than 15% of global greenhouse emissions. Leading by example is simply not enough.

Instead, we need an International Green New Deal: a pragmatic plan to raise $8tn – 5% of global GDP – each year, coordinate its investment in the transition to renewable energy and commit to providing climate protections on the basis of countries’ needs, rather than their means.

Call it the Organization for Emergency Environmental Cooperation – the namesake of the original OEEC 75 years ago. While many US activists find inspiration in a “second world war-style mobilization”, the International Green New Deal is better modeled by the Marshall plan that followed it. With financial assistance from the US government, 16 countries formed the Organization for European Economic Cooperation (OEEC), dedicated to rebuilding the infrastructure of a devastated continent and coordinating its supply of energy.

But if the original OEEC entrenched an extractive capitalism at Europe’s core –protecting the steel and coal cartel – the new organization for an International Green New Deal can empower communities around the world in a single transformational project.

The transnational scope of this mobilization is crucial for three main reasons.

The first is production. Recent studies show that, as long as countries cooperate, all continents have the wind, solar and hydropower resources they need in a zero-emissions world. Northern countries and mountainous regions have better access to wind power, while southern lands are better suited to exploiting the sun. An International Green New Deal could exploit these differences and ensure that renewable energy is available to all of them year-round.

Confronting the climate crisis will require more than keeping fossil fuels in the ground

The second is innovation. Confronting the climate crisis will require more than keeping fossil fuels in the ground. We will also need major scientific breakthroughs to develop renewable sources of energy, adapt existing infrastructure, detoxify our oceans and decarbonize the atmosphere. No country alone can fund the research and development necessary to meet these challenges. The OEEC would pool the brainpower of the global scientific community: a Green Manhattan Project.

The third is reparation. For centuries, countries such as the US and the UK have plundered natural resources from around the world and polluted them back out. Less developed nations have been doubly dispossessed: first, of their resource wealth, and second, of their right to a sustainable life – and in the case of many small island developing states, of their very right to exist. An International Green New Deal would redistribute resources to rehabilitate overexploited regions, protect against rising sea levels, and guarantee a decent standard of living to all climate refugees.

The UN climate change conferences will not save us from extinction – the demise of the Paris agreement should be evidence enough. These frameworks lock us into prisoners’ dilemmas, in which every country has an incentive to defect on their climate commitments, even if cooperation between them would yield a greater collective good. As long as climate cooperation is framed around sacrifice, it is vulnerable to strongmen like Donald Trump who vow to buck international rules in the name of national interests.

The International Green New Deal changes the frame. Rather than pleading for restraint, it sets out a positive-sum vision of international investment, in which the gains from joining in outweigh those to going it alone.

This is the strategy that won Franklin D Roosevelt the original New Deal. His plan addressed people who had given up hope and inspired in them the idea that there is an alternative. That there are ways of pressing idle resources into public service. It made sense to the disheartened and offered opportunity to the entrepreneurial.

The same is true of the International Green New Deal, which mobilizes public finance to crowd in private investments that, together, fund the $8tn transition. Just like in the original New Deal, public financing will involve a mix of taxes and bond instruments. On the former, we can introduce a global minimum corporate tax rate that is then redistributed on the basis of their sales. On the latter, public investment banks – including the European Investment Bank, the World Bank and the KfW, Germany’s state-owned development bank – can coordinate the issue of green bonds that the major central banks agree collectively to support in the secondary markets.

Suddenly, countries with large trade surpluses will realize they are better able to invest their excess capital if green investments in deficit countries are coordinated under the auspices of an international plan. The positive-sum dynamic will prevail.

In this sense, the stakes of the International Green New Deal are not merely environmental. By uniting countries in the project of bottom-up economic transformation – and coercing multinationals to fund their fair share of it – it will also stem the tide of bigotry and xenophobia engulfing the world.

“Advanced” capitalist countries today are literally falling apart. In the US, net public investment has fallen below half of one per cent of GDP. Across the eurozone, net public investment has remained below zero for nearly a decade. It is little wonder that political monsters are rising again: just as in the 1930s, the grapes of wrath are ripening and “growing heavy for the vintage”.

To revive the liberal democratic project, some pundits have suggested making China into a bogeyman. But the real bogeyman is of our creation: a climate crisis wrought by decades of inaction and underinvestment. To address the true existential threat that we face today, we must reverse the economic policies that brought us to this brink. Austerity means extinction.

The promise of an International Green New Deal to is to avoid the pitfalls of cold war politics and unite humanity in the only project capable of preserving a habitable planet. To do this, however, we need a powerful progressive international movement to demand that our leaders begin to act beyond their own borders. Let’s start building it. The children are watching.

Build, Don’t Bomb: A New American Foreign Policy

In this lecture to the Watson Institute for International and Public Affairs at Brown University, Rep. Gabbard discusses American foreign policy. She addresses the perils of the counterproductive, interventionist regime change wars that cost trillions of dollars that could otherwise be invested in our country’s future and the millions of lives that are lost.

 

On The Frontlines: A Mayor’s Roundtable

The Sanders Institute brought together four mayors who are truly on the frontlines of the progressive movement at The Gathering. Mayors Bill DeBlasio of New York City, Carmen Yulin Cruz of San Juan, Michael Tubbs of Stockton California and Ada Colau of Barcelona Spain came together to share innovative progressive policies, successes they have had and plans for the future.

 

The Housing Crisis In America

At the Sanders Institute Gathering, Senator Bernie Sanders, actor and activist Danny Glover, CEO of Champlain Housing Trust, Brenda Torpy and President & Founder of Healthy Housing Foundation, Michael Weinstein sat down to talk about the housing crisis in America.

We are the wealthiest country in the world. We spend seven hundred billion dollars on the military. We just gave a trillion dollars tax break to the top 1% and have spent trillions bailing out Wall Street. Clearly, there is no lack of resources to address the housing crisis. This is a lack of political will. And this is something we must change.

 

International Roundtable Panel

At the Sanders Institute Gathering, Senator Bernie Sanders, Mayor Ada Colau, MP Niki Ashton, economists David McWilliams and Jeffrey Sachs, and Yanis Varoufakis former Finance Minister in Greece sat down to talk about the fact that we all share common goals for our countries and the world. We can learn from each other, we can help each other, and we can join together.

 

The 12 Biggest Myths About Raising Taxes On The Rich

Some politicians are calling for higher taxes on the rich. Naturally, these proposals have unleashed a torrent of opposition – mostly from…the rich. Here are the 12 biggest myths they’re propounding:

Myth 1: A top marginal tax rate applies to all of a rich person’s total income or wealth.

Wrong. It would only apply to dollars in excess of a certain level. The 70 percent income tax rate proposed by Congresswoman Alexandria Ocasio-Cortez would apply only to dollars in excess of 10 million dollars a year. The 2 percent wealth tax proposed by Elizabeth Warren would apply only to wealth in excess of 50 million dollars.

Myth 2 : Raising taxes on the rich is a far-left idea.

Baloney. 70 percent of Americans – including 54 percent of Republicans – support raising taxes on families making more than 10 million dollars a year.  And expecting the rich to pay their fair share is a traditional American idea. From 1930 to 1980, the average top marginal income tax rate was  78 percent. From 1951 to 1963 it exceeded 90 percent – again, only on dollars in excess of a very high threshold. Even considering all deductions and tax credits, the very rich paid over half of their top incomes in taxes.

Myth 3: A wealth tax is unconstitutional.

Rubbish. Most locales already impose an annual wealth tax on the value of peoples’ homes – the main source of household wealth for most people. It’s called the property tax. The rich hold most of their wealth in stocks and bonds, so why should these forms of wealth escape taxation? Article I Section 8 of the Constitution gives “Congress [the] power to lay and collect taxes.”

Myth 4: When taxes on the rich are cut, they invest more and everyone benefits, when taxes on the rich are increased, economic growth slows.

Utter baloney. Trickle-down economics is a cruel joke. Donald Trump, George W. Bush, and Ronald Reagan all cut taxes on the rich, and nothing trickled down. There’s no evidence that higher taxes on the rich slows economic growth. To the contrary, when the top marginal tax rate has been high – between 71 to 92 percent – growth has averaged 4 percent a year. But when top rate has been low – between 28 and 39 percent – growth has averaged only 2.1 percent.

Myth 5: When you cut taxes on corporations, they invest more, and create more jobs.

Wrong again. After Trump and the Republicans lowered the corporate tax rate in 2018, America’s largest corporations cut more jobs than they created. They used their tax savings largely to increase their stock prices by buying back their own shares of stock – enriching executives and wealthy investors but providing no real benefit to the economy.

Myth 6: The rich already pay more than their fair share in taxes.

This is misleading, because it focuses only on income taxes – leaving out the large and growing tax burden on lower-income Americans; payroll taxes, state and local sales taxes, and property taxes take bigger bites out of the pay of lower-income families than higher-income.

Myth 7: The rich shouldn’t be taxed more because they already pay capital gains taxes.

Misleading. Rich families avoid paying capital gains taxes by passing their wealth on to their heirs. In fact, the largest share of big estates transferred from generation to generation are unrealized capital gains that have never been taxed.

Myth 8: The estate tax is a death tax that hits millions of Americans.

Baloney. The current estate tax, which only applies to assets in excess of 11 million dollars, or 22 million dollars for couples, affects fewer than 2,000 families.

Myth 9: If taxes are raised on the wealthy, they’ll find ways to evade them. So very little money is going to be raised.

More rubbish. For example, a 2 percent wealth tax, as proposed by Senator Elizabeth Warren, would raise around 2.75 trillion dollars over the next decade with very little tax evasion, according to research. A 70 percent tax on incomes over 10 million would raise close to 720 billion dollars over 10 years.

Myth 10: The only reason to raise taxes on the wealthy is to collect revenue.

No. Although these proposals would generate lots of revenue – and help us reduce the national debt while investing in schools, roads, and all the things we need – another major purpose is to reduce inequality, and thereby safeguard democracy against oligarchy.

Myth 11: It’s unfair to raise taxes on the wealthy.

Actually, it’s unfair not to raise taxes on the rich.  For the last 40 years, most Americans have seen no growth in their incomes at all, while the incomes of a minority at the top have skyrocketed. We’re rapidly heading toward a society dominated by a handful of super-rich, many of whom have never worked a day in their lives. More than 60 percent of wealth in America is now inherited.

Myth 12: They earned it. It’s their money.

Hogwash. It’s their country, too. They couldn’t maintain their fortunes without what America provides – national defense, police, laws, courts, political stability, and the Constitution. They couldn’t have got where they are without other things America provides – education, infrastructure, and a nation that respects private property. And to argue it’s “their money” also ignores a lot of other ways America has bestowed advantages on the rich – everything from bailing out Wall Street bankers when they get into trouble, to subsidizing the research of Big Pharma.

So the next time you hear one of these myths, know the truth.

The Labor Movement: Essential To Democracy

When unions are strong, all workers are better off. Yet, for too long we have devalued the role of labor in our economy and in our country. It is time to stand up and fight back! At the Sanders Institute Gathering, labor leaders from around the country came together to talk about the path forward. They talked about specific goals for individual unions like the Postal Workers Union advocating for a postal bank and vote-by-mail, successes that unions like NNU have had in educating their members and encouraging activism, and the path forward for our country as a whole.

 

Puerto Rico: Austerity Or A Green New Deal

Hurricanes Irma, Jose, and Maria devastated Puerto Rico. Almost three thousand Puerto Ricans died, infrastructure and energy systems were devastated, and it will take many years for Puerto Rico to recuperate. With this crisis has come a decision for Puerto Rico: Austerity, or rebuilding using a Green New Deal framework. At the Sanders Institute Gathering, we brought together Mayor Carmen Yulín Cruz, economist Robert Pollin, and community land trust expert John Davis to talk about the path forward for Puerto Rico.