Posted by Bob Lord
We're seeing the beginning of what's promising to be quite the war between the so-called center-left and a re-energized populist progressive left. It's a war we need and a war progressives must win, even if we lose a few battles in the early going.
The recent Third Way attack on Elizabeth Warren and Bill deBlasio was a sure sign of how concerned the Democratic establishment is. The Third Way stumbled badly, but this fight only is beginning.
Another pathetic salvo was fired by Bill Keller in Sunday's NYT: Inequality For Dummies. Keller tried mightily to explain the wisdom of what he called the "center-left" (translation: the Democratic establishment), as compared to the "left-left" (progressives). He failed miserably.
In one of the best take-downs I've read, Dean Baker rips Keller to shreds in Bill Keller's Center-Left is the Reason We Are Growing Less Rapidly. But Baker's piece is more than a great take-down. Baker exposes the utter depravity of center-left policy, which makes his piece an important read without regard to the entertaining take-down of Keller. Baker builds an airtight case for his conclusion:
In sum, it is actually fairly easy to summarize the distinction between Keller's center-left and his left-left. His center-left wants to continue the policies that have led to a massive upward redistribution of income over the last three decades. The left-left wants to reverse these policies and replace them with policies that will lead to more equitable and more rapid growth.
That is the essence of why progressives ultimately must prevail over centrists. You can follow Baker even if you don't have time to read Keller's piece first.
Or, if you're really short on time, follow me after the jump for a few highlights.
First, on the fallacy that the policies of the center-left are pro-growth:
The amazing part of the story is that Keller's center-left heroes are precisely the reason why the economy is not growing the way it did for most of the last century. Keller perhaps missed it, but it was the center-left that set the economy on a bubble driven growth path in the 1990s. The demand generated by the stock bubble was used to fill the hole created both by lower consumption spending due to the upward redistribution of income and the exploding trade deficit which resulted from Clinton's high dollar policy.
Keller's center-left friends also pushed financial deregulation so that their Wall Street friends could get ever richer at the expense of the rest of us. This deregulation facilitated the build-up of the housing bubble, the collapse of which gave us the current downturn from which we have still not recovered.
In terms of holding Medicare "inviolate," what on earth does Keller think he is talking about? The left-left has been pushing for years for measures that would lower costs by reducing the over-payments to providers. The left-left knows well the basic problem of Medicare and health care costs in the United States more generally; we pay our providers too much money. We pay our doctors, our drug companies, our health care equipment manufacturers twice as much as people in other wealthy countries.
The left-left wants to reduce these over-payments, something which appears to now be happening with the recent cost slowdown. Keller's center-left friends would rather protect the income of the providers and force people to accept fewer services and pay more for what they get. (In terms of allowing the market into health care, how about allowing people to buy into other countries' Medicare programs with the government and the patient splitting the savings? Why are Keller's center-left friends so afraid of this market friendly measure?)
Keller later notes that the U.S. economy is "70 percent dependent on domestic consumers, way more than other developed countries." He then contrasts Obama and the center-left with the left-left:
"he would do trade deals to expand our diminishing share of foreign markets."
Okay, can Keller really be this confused? It is net exports, exports minus imports, that determine demand in the U.S. economy. Trade agreements have not done a good job of boosting net exports, that is why we have such a large trade deficit. If we shut an assembly plant in Ohio and instead ship a car engine to Mexico to be assembled into a car to be re-imported to the United States that doesn't increase demand or employment in the United States.
If we want to increase share of demand not due to domestic consumption, then we must increase net exports. The key factor here is lowering the value of the dollar. The left-left knows this and talks about making U.S. goods and services more competitive with a lower valued dollar. The center-left repeats gibberish about the virtues of trade agreements which only get taken seriously in public debate because of their money and power. (Btw, there is zero reason to believe that a simple Keynesian increase in demand, based on trade or anything else, won't restore growth to its former path.)
"And a third difference between the near left and the far left is the question of making government more efficient. This is not so much a policy dispute as a mind-set."
Yes, the center-left wants to contract out large amounts of government services to their friends in the business community. For example, we have the deal in Chicago engineered by the center-left former Mayor Richard M. Daley in which the city leased off its parking meters for 75 years to Morgan Stanley. The price was probably about half of the proper valuation. And, in good center-left practice, Daley treated the one-time payment as current revenue to deal with a budget shortfall. The center-left is associated with all sorts of government contracting ventures that don't save taxpayers any money but do make their contributors very rich.
On the center-left's plans to cut Social Security:
Finally Keller repeats one of my favorite center-left lies. (Sorry, I don't feel like mincing words to be polite just now.) He tells readers:
"centrists favor measures to slow the growth of entitlements: using a cost-of-living adjustment (COLA) formula that more accurately reflects how people spend,..."
Really? Keller knows that the chained consumer price index more accurately reflects the spending patterns of people on Social Security? Yes, I know Keller didn't specify that he was referring to the spending patterns of people on Social Security, he referred to people generically, but no one should waste any time on this sophistry. The point of having a cost-of-living adjustment is to maintain the purchasing power of Social Security checks. To do this the measure must be based on the cost of living of people on Social Security, not the basket of goods and services consumed by people in Equatorial Guinea.
The proposal to switch the indexation of post-retirement benefits to the chained CPI is a proposal for cutting benefits pure and simple. It has nothing to do with an interest in increasing accuracy. If accuracy was the issue then we would be would just have the Bureau of Labor Statistics construct a full elderly CPI and use that as the basis for indexing benefits. Not one of Keller's center-left friends supports this measure.
The bottom line: There's no value for progressives in continuing to dance with the center-left. Yes, the center-left is not as destructive as the Republicans, but they're still destructive. It's time for progressives to stop hoping the Democratic establishment will listen, and just take over, by whatever means are necessary.