Krugman: Obama will focus on inequality in his SOTU; why the critics are wrong.

[pampango]

All indications are that President Obama will make inequality the central theme of his State of the Union address. Assuming he does, he will face two different kinds of sniping. One will come from the usual suspects on the right, shrieking “class warfare”. The other will come from a variety of people, some of them well-intentioned, arguing that while sure, inequality is an issue, the crucial thing now is to get the economy growing and create more jobs; these people will argue that populism is a diversion from the main issue.

Here’s why they’re wrong.

First of all, even on the straight economics inequality and job creation aren’t completely separable issues. There’s anironclad case that rising inequality helped set the stage for economic crisis, and is holding back recovery; there’s an even stronger case that weak employment is depressing wages and increasing inequality. So Obama can and one hopes will treat inequality-and-jobs as a single theme, and do so with a clear intellectual conscience.

It has been painfully obvious, to anyone willing to see (a group that unfortunately doesn’t include a large part of the press corps) that deficit obsession hasn’t really been about deficits — it has been about using deficits as a club with which to smash to welfare state, and hence increase inequality. Even the supposedly nonpartisan players have this remarkable habit of including “reducing marginal tax rates” as a key goal of deficit reduction strategies, which is a dead giveaway to what it’s really about.

Conversely, talking about the need to help struggling families is also a way to shift the focus away from deficit obsession, and pave the way at least for a relaxation of austerity, if not actual stimulus. ... recent Gallup polling shows that most Americans are class warriors, at least in a mild sense:

http://krugman.blogs.nytimes.com/2014/01/22/a-note-on-the-political-economy-of-populism/

[woo me with science]

1. And our utterly corporate, utterly craven, dishonest media

will not even MENTION the TPP.

They will not even MENTION that pretending to care about inequality while pushing forward this predatory trade agreement is like pretending to care about forest fires while pouring gas on the forest and lighting a match.

The messaging is Orwellian. There is no other way to put it. War is Peace. The chocolate ration is being increased. 2 + 2 = 5. Our government and our media are corrupt to the core, and we are to smile and pretend none of it is happening.

[pampango]

2. This is an opinion posted by Krugman. If you are complaining that he did not mention it

in this piece, I suspect it is because he does not think it is as important as most of us 'smart' people at DU do. (I doubt that Krugman would consider himself to be a proxy for "our utterly corporate, utterly craven, dishonest media" - since he is always pushing 'liberal, social democratic' policies but I digress.)

Krugman seems to focus more on the strength of the safety net, progressive taxes and fiscal austerity rather than on trade issues when he assigns blame for the inequality in the US. He is 'European' in that sense.

Krugman describes himself as liberal, and has explained that he views the term "liberal" in the American context to mean "more or less what social democratic means in Europe."

http://en.wikipedia.org/wiki/Paul_Krugman#Political_views

My take is that he believes that a strong safety net, progressive taxes, strong unions and fiscal stimulation in a bad economy produce an equitable society. Blaming trade for inequality ignores the fact that the most equitable societies in the world trade the most.

[frazzled]

6. +1

I think you covered the waterfront on that complaint. Thanks.

[mike_c]

7. no one is "blaming trade for inequality...."

However, trade policy can certainly work to deepen inequality if it results in lower wages and social services for working people and greater profits for the already wealthy. Obama cannot simultaneously work to decrease inequality and to make the TPP as we understand it U.S. trade policy, or at least not with any credibility.

[Hoyt]

15. We can tax the wealthy. I think blaming trade agreements for our problems is a mistake.

The TPP will not be left up to Obama. And, I don't think trade agreements are responsible for lower social services, callous Republicans get the blame for that.

[pscot]

18. Trade agreements have been a disaster

for the working class; the industrial workers who underpinned our prosperity for 50 years. Forty % of the economy now is in Finance. Clerical workers don't have the same labor consciousness as hard hats, or the same heft when it comes to labor actions. NAFTA stabbed labor in the back. It was a mortal wound to the economy. Now part 3 is coming around.

[Hoyt]

20. So what's your solution, protectionism? If that worked, industrialized countries would close

their borders and live happily ever after. Greece would be booming, as would Germany, Britian, France, etc. Sorry, it's a different world and too late to go back to the 50s. Wish we could. We need to change a bunch of things, while salvaging what we can.

[pscot]

24. These trade agreements are a ratchet

that only works in one direction; it squeezes the workers. We aren't salvaging anything. We're creating a permanent underclass for the benefit of the Corporation.

[elzenmahn]

30. Actually...

YES!!!!!!!

Bring back the tariffs!

Bring back the import quotas!

I'm not joking - it was protectionism that built many a country's industrial base - including our own.

[Hoyt]

32. Not really. The times were much different than now. We ain't go'in back, unfortunately.

[pampango]

35. The last time we had high tariffs was in the 1920's thanks to republicans at the time.

The 1% of that era loved it since it produced the most inequitable distribution of income the country had ever seen up to that time. It is no surprise that FDR lowered tariffs then helped structure the post-war world so that it would be difficult for countries to unilaterally bring back high tariffs.

[Fortinbras Armstrong]

42. Are you familiar with Mussolini's economic and trade policies?

In 1935, following the Italian invasion of Ethiopia, the League of Nations imposed trade sanctions on Italy. This forced Italy to institute autarky -- an economy that is self-sufficient and does not take part in international trade, or severely limits trade with the outside world -- and strengthened Mussolini's belief that economic self-sufficiency was vital to national security. The sanctions did not have their intended effects, because the Italian government had already begun restricting trade and preparing for autarky. In particular, Italy imposed a severe ban on most imports, and the government sought to persuade consumers to buy Italian-made products. In May 1935, the government compelled individuals and businesses to turn over all foreign issued securities to the central bank. By 1936 the economic sanctions on Italy were lifted, but the Fascists continued to insist on economic isolation.

The autarky imposed by the Fascists contributed to Italy becoming one of the poorest countries in Europe.

[CTyankee]

21. Yes, Dr. K has a real social conscience, and it has become more obvious as he gets older...

I consider Krugman to be a left wing Democrat...

[JDPriestly]

22. The problem is that we don't exactly "trade."

The word trade suggests to me that two or more parties exchange things of equal value. It is fair. One partner gives and the other partner gives something back of close to equal value.

I know that is the popular definition and perhaps not the definition that is used by our government.

The fact is that since we increased our "free trade," our trade deficit has grown enormously. That is a sure sign that we are not really trading, but buying.

What is more, we are spending huge sums to keep trade routes open for our "free" trade. Instead of preparing to defend our country, we are waging wars in other countries, countries that provide raw materials, all kinds of natural resources, especially oil. That too is part of the very high price we pay for "free" trade.

And at home, those of us who are not wealthy, those of us who are not corporations, those of us who are on the losing end of "free" trade know that there is a link between "free" trade and economic inequality in our country. And it is caused by the fact that we are buying more from other countries than we are selling to other countries. That discrepancy is in part the profits that go to the very wealthy and to large corporations. What we are getting as trade grows are fewer opportunities and lower pay.

That is the root of the economic inequality in our country.

[elzenmahn]

29. I sincerely hope you aren't advocating for the TPP...

"Blaming trade for inequality ignores the fact that the most equitable societies in the world trade the most."

Really? So when somebody goes to Walmart to buy clothing made at a sweatshop factory in a third-world country, that trade is "equitable" in your eyes? Is it equitable to the workers who work 6-7 day schedules at 10+ hours per day? How about to the nearly non-existent textile industry in this country? Or workers in the US who are seeing their wages driven downward by workers in those same 3rd world countries who make a fraction of the US federal minimum wage?

I think we've seen what supposedly "free trade" has gotten us. And spare me the arguments about how great and wonderful, and "equitable" it is.

[pampango]

34. I would advocate for it if it were the high standards agreement that Europeans have in the EU.

But from all I have read that is not what the TPP is. There were some who thought that the idea of a high standards agreement with tough, enforceable labor rights and environmental standards (to the chagrin of many national sovereignty enthusiasts) would be good for us and the other TPP countries just like Europeans benefit from theirs.

I believe that liberals would support an international agreement that was based on such standards regarding labor and the environment. It would go a long way to dealing with the 'advantages' that Third World countries have in their disregard for unions and the environment. It looks like the TPP will not be such an agreement so we will be stuck with the WTO and 'free trade' agreement rules that our trade now operates under which are weak in those important areas.

[elzenmahn]

36. And why are labor/environmental standards virtually non-existent in the TPP?

...as Deep Throat advocated - "follow the money."

An agreement with those standard would only be possible with a strong labor and environmental movement here. In other words, a strong, politically viable, TRUE "left wing". We haven't had that in over thirty years.

Forget "free" trade - it is, and always has been, a hoax. Bring back the tariffs and quotas, I say.

[pampango]

38. AFAIK, the labor chapter has not been released, but the environmental chapter has.

The documents consist of the environmental chapter as well as a “Report from the Chairs,” which offers an unusual behind-the-scenes look into the divisive trade negotiations, until now shrouded in secrecy. The report indicates that the United States has been pushing for tough environmental provisions, particularly legally binding language that would provide for sanctions against participating countries for environmental violations. The United States is also insisting that the nations follow existing global environmental treaties.

But many of those proposals are opposed by most or all of the other Pacific Rim nations working on the deal, including Australia, New Zealand, Canada, Mexico, Chile, Japan, Singapore, Malaysia, Brunei, Vietnam and Peru. Developing Asian countries, in particular, have long resisted outside efforts to enforce strong environmental controls, arguing that they could hurt their growing economies.

The report appears to indicate that the United States is losing many of those fights ...

http://www.nytimes.com/2014/01/15/us/politics/administration-is-seen-as-retreating-on-environment-in-talks-on-pacific-trade.html

Now I realize that there are those who figure "if the United States is losing many of those fights" it must never have really cared and is just playing 4-D chess. I do not really subscribe to the theory that if I lose some parts of a negotiation that means I never really wanted to win on them at all.

Getting rid of high tariffs and replacing them with the income tax was "the most popular economic justice movement of the early 20th century."

Everyday Americans hated the tax system of the Gilded Age. The federal government gathered taxes in two ways. First, it placed high tariff rates on imports. These import taxes protected American industries from competition. This allowed companies to charge high prices on products that the working class needed to survive while also protecting the monopolies that controlled their everyday lives. Second, the government had high excise taxes on tobacco and alcohol, two products used heavily by the American working class.

FDR fought to reduce the tariffs that republicans had reinstated after the progressive victory on the income tax and lower tariffs adopted by Woodrow Wilson. FDR not only lowered tariffs during his presidency, he helped structure the post-war world so that high tariffs were difficult for countries to unilaterally impose in the future.

[1StrongBlackMan]

31. Thank you for linking to Krugman's piece, re: TPP ...

I had missed it.

I tend to trust Krugman's economic judgment/opinion.

[mike_c]

3. I'll wait to see whether he talks about it, or proposes to do something about it....

eom

[Skittles]

4. it has become too obvious to ignore now

[Cali_Democrat]

5. Whatever he proposes will be shot down by Congress

Just like his jobs/infrastructure proposal was.

The key is to GOTV 2014 so we can get a new Congress!!!

[riqster]

11. GOTFV!

[Cali_Democrat]

14. Amen!!

[JDPriestly]

27. Yes.

[woo me with science]

8. Stance on TPP is key. Raising the minimum wage while *simultaneously* pushing for TPP

is like giving a man a quarter and then beating him up and emptying his bank accounts.

[Skittles]

9. I hear you

indeed I do

[Cali_Democrat]

17. GOTV 2014!!!

Do what you can!!!

[msanthrope]

23. I agree with Krugman on the TPP..it's not as important as you think...

http://krugman.blogs.nytimes.com/2013/12/12/tpp/?_php=true&_type=blogs&_r=0

[ProSense]

10. He should cancel the SOTU

He needs to STFU...TPP.

[riqster]

12. Dafuq?

Seriously?

[ProSense]

13. No,

I was just getting in an example of prevailing sentiment.

[riqster]

16. Thank the gods.

[JDPriestly]

19. True to his form, Krugman hits the nail on the head.

Macroeconomics is an impossible concept for most of us to understand.

Economic inequality -- that we feel in our bones.

And by the way, thanks to Martin Luther King, Jr. Day, we have discussed the still nagging problem of racism and the lack of opportunities for African-Americans in particular in our country.

Economic inequality is the real problem for minorities especially African-Americans, immigrants from various countries and Native Americans.

The wealthy will argue that our country has gained from free trade. They look at the goods at low prices. That is their measure.

But the fact is for those of us who are not so wealthy, the benefits of lower prices often mean lower wages or lower pension or lower Social Security and far less opportunity to move up the economic and social ladder. And for no one is this truer than for groups we traditionally call "miniorities." (Although in California, all races will soon be minorities if we aren't already).

[davidthegnome]

25. I'm sure he will address it.

I also have no confidence that he can really do anything about it - not that I doubt his intentions or even his passion, but he is working with a house full of lunatics and idiots. Nor is he, by any means, immune to corporate influence himself. What really needs to be done in this Country... I do not think anyone has the courage to talk about or even attempt, with the possible exceptions of people Elizabeth Warren or Bernie Sanders - who will be ridiculed by so called democrats, just as much as they are by the right.

I expect to be making eight dollars an hour for at least a couple more years. Maybe then I'll go up to nine. Maybe by the time I'm forty I'll hit ten or so. Either way, I have no faith that this current system of government has both the ability and the will to improve things for those of us who live in poverty. I expect that, rather than rebuilding, improving, or somehow boosting our social safety net... the powers that be will continue to cut away at what they call "entitlement programs", corporate profits will probably keep going up - the richer will get richer and the poor will get screwed. That's just the way this shit works.

So I just can't really get excited about it.

[randome]

37. Of course he can't do much. The office of the President is the weakest branch of government.

That's why November is more important than anything. We need control of the House and we need to retain control of the Senate.

[hr][font color="blue"][center]"There is a crack in everything. That's how the light gets in."
Leonard Cohen, Anthem (1992)[/center][/font][hr]

[BlancheSplanchnik]

26. that was an excellent read. thanks!

[unhappycamper]

28. Our Iraq and Afghanistan adventures were put on the National Credit Card:

http://en.wikipedia.org/wiki/Financial_cost_of_the_Iraq_War

Direct costs

The costs of the 2003-2010 Iraq War are often contested, as academics and critics have unearthed many hidden costs not represented in official estimates. The most recent major report on these costs come from Brown University in the form of the Costs of War project,[1] which said the total for wars in Iraq, Afghanistan, and Pakistan is at least $3.2-4 trillion.[1] The report disavowed previous estimates of the Iraq War's cost as being under $1 trillion, saying the Department of Defense's direct spending on Iraq totaled at least $757.8 billion, but also highlighting the complementary costs at home, such as interest paid on the funds borrowed to finance the wars and a potential nearly $1 trillion in extra spending to care for veterans returning from combat through 2050.[1] An update in 2013 topped this at US$6 trillion.[2]

Those figures are dramatically higher than typical estimates published just prior to the start of the Iraq War, many of which were based on a shorter term of involvement. For example, in a March 16, 2003 Meet the Press interview of Vice President Dick Cheney, held less than a week before the Iraq War began, host Tim Russert reported that "every analysis said this war itself would cost about $80 billion, recovery of Baghdad, perhaps of Iraq, about $10 billion per year. We should expect as American citizens that this would cost at least $100 billion for a two-year involvement."[3]

[1StrongBlackMan]

33. Dr. Krugman left out ...

All indications are that President Obama will make inequality the central theme of his State of the Union address. Assuming he does, he will face two different kinds of sniping. One will come from the usual suspects on the right, shrieking “class warfare”. The other will come from a variety of people, some of them well-intentioned, arguing that while sure, inequality is an issue, the crucial thing now is to get the economy growing and create more jobs; these people will argue that populism is a diversion from the main issue.

Another well represented group that will certainly "snipe", regardless of what President Obama focuses on during his SOTU Address ... the perpetually discontented DUers.

Here's a prediction:

President Obama will focus on income inequity, arguing for the extension of U/C, challenging Congress to raise the MW, address job creation measures, covering much of what DUers want to see come about.

DU's response:

"Pretty speech" ... Ignore everything he said to focus on what he didn't say (I'm laying odds that someone will proclaim, "He just said he's really gonna cut SS, this time&quot

[YOHABLO]

39. I get tired of the rhetoric. If repugs take the senate and the house .. we are doomed.

[Demo_Chris]

40. At this point I no longer care what he says, I just hope for a Senate to block his BS. nt

[pampango]

41. Depending on which 'BS' you are talking about, the House is more likely to block it. n/t

[Demo_Chris]

43. I was thinking TPP and Chained CPI, though I sure there is more. nt

[pampango]

44. I am sure republicans in the House would tell you there is more, much more. n/t