The Great Betrayal 3

I have three items for today's write-up on Pat Buchanan's The Great Betrayal: How American Sovereignty and Social Justice Are Being Sacrificed to the Gods of the Global Economy.

1.  Edward Gresser argues in Freedom from Want that free trade leads to peace, since people are less likely to attack those with whom they trade.  One thought that was in my mind, which I did not share, was this: Why couldn't a country attack a country with which it has a trading relationship?  Then, it could just plunder the other country's resources, without having to give something of its own to receive them.  There may be something to my thought, but I should also remember that it may cost a country money and resources to conquer and rule another country, and so perhaps trade is better than conquest.

Pat Buchanan disputes the mantra that free trade leads to peace, as he notes examples to the contrary.  Britain engaged in free trade in the nineteenth century, yet it was involved in numerous wars.  The United States was a free-trade zone, but that didn't stop the Civil War.  In 1914, Germany attacked Russia, which bought a lot of German goods, and Great Britain declared war on its customer Germany.  In the 1930's, Japan attacked China and the U.S., though it traded with them.  Hitler invaded Stalinist Russia, a huge source of "food, oil, and raw materials" for Germany (page 61).

2.  One question that is in my mind as I read critiques of free trade is this: Why don't all American manufacturing companies move overseas, if it's so much to their advantage to do so?  The fact is that they don't, for there are still manufacturing plants in the U.S.  Buchanan, at least in my latest reading, does not answer this question head-on, but he does mention advantages for companies that stay in the United States: more productive labor, and also better equipment.  (But why couldn't companies take that better equipment overseas?)  The reason, according to Buchanan, that companies move overseas is that it's cheaper, since the workers can be paid less.  Buchanan (a conservative) also takes a swipe at big government policies that (according to him) oppress companies in the U.S. and encourage them to outsource.

3.  This third item is actually not from my latest reading, but from a previous reading.  Why does Buchanan think that it's better for the U.S. to have manufacturing jobs as opposed to a large number of service jobs?  On page 58, Buchanan states:

"Manufacturing is the key to national power.  Not only does it pay more than service industries but the rates of productivity growth are higher and the potential of new industry arising is far greater.  From radio came television, VCRs and flat-panel screens.  From adding machines came calculators and computers.  From the electric typewriter came the word processor.  Research and development follows manufacturing."

For Buchanan, manufacturing generates research and development, which coincides with economic growth.  I think that it's also important to recall what Arianna Huffington said: we need manufacturing jobs because how can we export stuff if we're not producing it?

Lou Dobbs' "War on the Middle Class" 7

I finished Lou Dobbs' War on the Middle Class: How the Government, Big Business, and Special Interests Are Waging War on the American Dream and How to Fight Back.

I decided to read this book after Arianna Huffington's Third World America because in reading Arianna's book I was not entirely clear about how U.S. government policies hurt the middle class.  Arianna's book came after the economic crisis, and so she largely focused on that, but I knew that there were people who argued that the war on the middle class occurred even before then.  Arianna herself contended that the policies of the 1980's had a lot to do with it!  I wanted to learn more about this, and so I proceeded to read Lou Dobbs' book, which was published before the economic crisis.

Dobbs identifies some of the same problems that Arianna does: outsourcing of jobs, a decline in education, high health care costs, the oppressive bankruptcy bill that passed during the Presidency of George W. Bush, and the fact that lobbies and special interests inhibit real reform from taking place, as politicians rely on special interests for campaign contributions, and in many cases even join their ranks after leaving office.  Unlike Arianna, however, Dobbs talks about illegal immigration being a part of the war on the middle class----as it drives wages down and health care costs up, since illegal immigrants (who lack preventive care and work in high-risk jobs) take advantage of emergency rooms and often cannot pay.

In terms of solutions, I thought that Arianna and Dobbs differed, in areas.  My impression was that Arianna supported more of a bottom-up approach----individuals need to take the initiative to support smaller banks rather than bigger banks, individuals need to cultivate empathy, etc.  But Dobbs seemed to favor more of a governmental approach----he notes that local governments are fighting outsourcing by rejecting companies that outsource, and that states are taking the initiative in fighting illegal immigration (and, if I'm not mistaken, Dobbs' book was written prior to Arizona's controversial law).  Dobbs also praises Mitt Romney's health care and educational policies as governor.  Regarding where Arianna and Dobbs overlapped, both were strongly in favor of campaign finance reform.

I guess where I was disappointed in reading Dobbs' book was that he did not talk about how the 1980's led to the current dismal state of the middle class.  If I'm not mistaken, outsourcing really took off after the trade agreements under the Clinton Administration.  How were Ronald Reagan's policies part of the problem, though?  I have read that his cuts in the social safety net were part of the problem, but that affects the lower economic classes, not the middle class.  Some have suggested that his reduction in spending on higher education discouraged people from going to college----since that came at a time when tuitions were high.  Did Reagan also undermine labor unions, in some manner?  I can envision that leading to disparities of wealth.  I'm just throwing out ideas, and I do not have full knowledge about the accuracy of what I am saying.  That's why I continue to read!

Lou Dobbs' "War on the Middle Class" 6: Education and Health Care

In my latest reading of Lou Dobbs' War on the Middle Class: How the Government, Big Business, and Special Interest Groups Are Waging War on the American Dream and How to Fight Back, I read the chapter on education, and started the chapter on health care.

On education, Dobbs (like Arianna Huffington in Third World America) articulated views that span the political spectrum.  Dobbs laments that a lot of government spending on education goes to bureaucracy rather than improving education, and yet Dobbs believes that teachers should be paid more because higher pay will attract quality teachers.  At the same time, Dobbs is not for paying teachers more based on seniority----the system that many teachers' unions endorse----but rather he believes in merit pay.  Regarding higher education, Dobbs is critical of cut-backs in student loans, the inhibition on loan consolidation, and the increase in the student loan interest rate.  (This book was published in 2006, which was during the Bush II Administration.)  And Dobbs is also against government cutbacks in job training (but Republicans usually respond that they're against wasteful duplication of job training programs, not job training itself).

On health care, Dobbs criticizes President George W. Bush for focusing on Social Security and how federal courts handle moral issues rather than health care, which is of concern to many Americans.  Dobbs notes that the American health care system is driving people to bankruptcy, even as the oppressive bankruptcy law that was passed under George W. Bush (due to the influence of special interests) strips bankruptcy of its status as a refuge!  Dobbs also does not care for the prescription drug benefit because it offers seniors choices, yet it does so in complex language and thus many seniors do not understand their options (and, according to Dobbs, the government officials who are there to help seniors in this communicate inaccurate information).  Meanwhile, health insurance companies profit from this "benefit".  Dobbs lays into the boogeymen of both the right and also the left: the trial lawyers, the pharmaceuticals, and the health insurance companies.

Lou Dobbs' "War on the Middle Class" 4: Free Trade

In my latest reading of War on the Middle Class: How the Government, Big Business, and Special Interest Groups Are Waging War on the American Dream and How to Fight Back, Lou Dobbs criticized free trade and outsourcing.

Regarding free trade, Dobbs argues that the current system is not balanced, for we (by which I mean the U.S.) buy other countries' goods more than they buy ours, resulting in a trade deficit.  Not only are our tariffs lower than that of some of our trading partners, but there also are many in some of these countries who are too poor to buy our products.  Moreover, Dobbs contends that NAFTA has not ameliorated poverty in Mexico.  Dobbs also talks about how the World Trade Organization infringes on American sovereignty.  On page 105, Dobbs states, "The WTO is currently assisting Wal-Mart in taking on state policies, by helping the world's biggest retailer get concessions opposed by local governments."

Regarding outsourcing, Dobbs states that it has resulted in the export, not only of manufacturing jobs, but also of the service and tech jobs that free trade was supposed to create in the United States.  Arianna Huffington made the same point in Third World America, blaming this problem on the United States' lack of competitiveness in education.  According to Dobbs, the jobs that will have the greatest demand include waiters and waitresses, janitors and cleaners, food preparers, hospital workers, cashiers, customer-service representatives, retail salespeople, general and operational managers, and postsecondary teachers----jobs that cannot be outsourced.  Dobbs does not believe that the jobs that people get after losing their manufacturing jobs pay as much, and Dobbs holds that, notwithstanding the cheap goods that free trade has provided to people in the U.S., employees in the U.S. are not better off, and that is due to the stagnation of their wages.

I'm planning on reading more about free trade after I finish Dobbs' book: Edward Gresser's Freedom from Want: American Liberalism and the Global Economy, and Pat Buchanan's The Great Betrayal: How American Sovereignty and Social Justice Are Being Sacrificed to the Gods of the Global Economy.  My impression (and I am open to correction) is that the former book defends free trade from a liberal perspective, whereas the latter critiques it.  I'm curious about how free trade has impacted the United States and the rest of the world, and what the solution could be.  While Dobbs is probably correct that free trade has resulted in the stagnation of wages, do we want to create a situation in which other countries are no longer a market for our goods (at some level), or prices go up due to protectionism resulting in lower productivity?

Lou Dobbs' "War on the Middle Class" 1

I started Lou Dobbs' 2006 book, War on the Middle Class: How the Government, Big Business, and Special Interest Groups Are Waging War on the American Dream and How to Fight Back.

Here are some items:

1.  On pages 5-6, Lou Dobbs talks about how the Bush II Administration imposed a four-year embargo on White House staffers appearing on Dobbs' show.  The reason?  Dobbs criticized the Bush II Administration for using the term "war on terror" rather than highlighting that the war is against "radical Islamist terrorists".  This stood out to me because I recalled Newt Gingrich arguing that President Barack Obama's Administration boycotted Fox News because it did not like Fox's coverage.  Apparently, Lou Dobbs thinks that George W. Bush's Administration did the same sort of thing to him!  But I'm puzzled as to why the Bush II Administration did that, for I thought that the Bush II Administration publicly acknowledged that the U.S. was at war with radical Islam.

2.  On pages 6-7, Dobbs says that he criticized the U.S. Justice Department for indicting Arthur Andersen's Enron auditing firm rather than Arthur Andersen alone.  Dobbs did so because he was concerned for the "twenty-eight thousand innocent employees" who were put out of work because the entire firm was indicted.  Dobbs notes that the Justice Department later adopted a policy of indicting individuals rather than firms, and that the U.S. Supreme Court overturned the conviction of the firm.

3.  On page 14, the book has a moving passage about how not all of the signers of the Declaration of Independence were from the elite.  Some of them were, but there were others who were millworkers and small businessmen.

4.  On page 19, Dobbs criticizes legislation to "roll back the estate tax", a tax that affects hardly two percent of Americans and brings in over $20 billion annually in taxes.  According to Dobbs, rolling this tax back will result in higher tax rates for "you"----which I take to be the middle class.  There is debate about who has a greater tax burden, the rich or the middle class.  Many conservatives have argued that the rich pay a lot of taxes, whereas there are many others in America who pay no federal income taxes.  But there are people on the left who contend that the rich pay less taxes as a percentage of their income than do the middle class.

5.  On page 20, Dobbs says that "less than a third of the richest people in the United States started out their lives in the middle or lower classes on the economic scale" (page 20).  For Dobbs, there is not much economic mobility in the U.S. these days.  And Dobbs thinks that a significant part of the problem is free trade policies, putting U.S. workers into competition with poorer workers in the world, tax cuts resulting in less funding for education, and lack of government concern about health care.  And, like Arianna Huffington, Dobbs criticizes the bankruptcy law, which robs middle-class people of the refuge of bankruptcy.

Dobbs says that free trade policies are "for the benefit of U.S. multinationals that remain uncompetitive in the global marketplace", but I wish that he'd explain how the multinationals are uncompetitive yet are benefiting.  I thought the problem was that we could not compete with cheaper foreign labor.  Maybe Dobbs will explain later in the book.

Arianna Huffington's Third World America 8

I finished Arianna Huffington's Third World America: How Our Politicians Are Abandoning the Middle Class and Betraying the American Dream.  I thought that the book was good in that it told the stories of people who are economically struggling, highlighted political and economic corruption, and had inspiring stories about individuals who are trying to be a part of the solution----people who cope with their unemployment by serving others, social networks helping people to find employment, etc.  Arianna calls for empathy, and I agree with her that this is important.  I also appreciated her outside-of-the-box thinking, as she did not consistently fit into the left-wing box and was open to a variety of ideas.  I wish that the book did a better job, however, in showing how government policies have contributed to the decline of the middle class.  That's why I plan to read Lou Dobb's 2006 book, War on the Middle Class: How the Government, Big Business, and Special Interest Groups Are Waging War on the American Dream and How to Fight Back.

Arianna Huffington's Third World America 7

In my latest reading of Third World America: How Our Politicians Are Abandoning the Middle Class and Betraying the American Dream, Arianna Huffington discusses ways that the government can create or facilitate the creation of jobs: establishing jobs to refurbish parks (among other things), tax credits for small businesses, attracting foreign talent to the United States, setting up banks to encourage green energy, etc.

What I particularly liked in my latest reading, however, was Arianna's discussion of what private individuals can do to prevent the U.S. from becoming Third World America.  For one, she says that people should put their money in their local community banks or credit unions rather than big banks.  She refers to a movement that she and others launched (Move Your Money) that did precisely that.  One way to stand against banks that are too big to fail is, well, to put you money in smaller banks!  Moreover, Arianna states that many credit unions do not aim to "maximize short-term profits" for the reason that they are not owned by shareholders, and so they tend to avoid "risky subprime loans", "offer lower fees and higher interest rates on savings", and hold home mortgages themselves rather than slicing them up for Wall Street (pages 203-204).

Second, Arianna mentions HelloWallet.com, a company that gives affordable financial advice.  It helps people to save and steers them toward mortgages and credit cards with good rates----so that you're not signing a mortgage or agreeing to a credit card that looks good at first, before the rates are significantly jacked up!  As Arianna notes, because HelloWallet is independent of banks, users of its services are getting "unbiased guidance", with the result that banks can be held accountable as people make informed decisions.

I am more of a liberal nowadays, but one reason that I became a conservative years ago is that I preferred private ways to deal with problems over big government.  Now, I'm not for the government sitting back and letting nature run its course, but I still think it's cool when the private sector works to make things better.  In my opinion, making things better should be something that all of us try to do----in the public and also the private sectors.

Arianna Huffington's Third World America 6

I have two items for my write-up today on Arianna Huffington's Third World America: How Our Politicians Are Abandoning the Middle Class and Betraying the American Dream.

1.  Arianna advocates campaign finance reform as a way to address the impending problem of a Third World America.  She mentions Senator Ted Kaufman of Delaware, a bold critic of Wall Street.  Why was he so bold?  Arianna offers two reasons.  First, Kaufman did not get his post through election, for he was appointed to replace Joe Biden when Biden became Vice-President.  Second, Kaufman did not intend to run for re-election.  Consequently, Kaufman did not have to appease special interests to get money for an election campaign.

I agree with Arianna that campaign finance reform is important, but I also think that Arianna could have done a better job in detailing how special interests' influence on government has hurt the middle class.  She refers to the bankruptcy law that was passed during George W. Bush's Administration, a law that credit-card companies supported that (according to critics) was oppressive towards people who were in debt (and Arianna notes that some people these days actually have to use their credit-cards for necessities).  And she made a brief reference to Democratic ex-Senator Tom Daschle's job with an insurance company, which (according to her) seeks to hinder health care reform.  These are important points, but I wish I saw more examples in Arianna's book of how the influence of special interests undermines the middle class.  Arianna focuses a lot on the recent economic crisis and how lax oversight led to that, so perhaps she feels that's an example.  Perhaps it is, but, as she notes, the undermining of the middle class occurred before the economic crisis.  Perhaps to get what I want to know, I should read Lou Dobb's War on the Middle Class, which was written prior to the economic crisis.

2.  I've remarked before that Arianna sometimes breaks out of the left-wing box that some may put her in.  She especially did that in my latest reading, in which she endorsed school choice.  Arianna's proposal is for the government to give parents money so that they can send their kids to the school of their choice, and the schools would have to be approved by the government.  She compares this educational policy to the Canadian health care system, in which people see private doctors of their choice, and the government pays for their treatment.  That was pretty cool: appeal to something that conservatives hate and that many progressives love (the Canadian health care system) to promote an idea that (on some level) is touted primarily by conservatives.

Arianna Huffington's Third World America 5

My latest reading of Arianna Huffington's Third World America: How Our Politicians Are Abandoning the Middle Class and Betraying the American Dream was rather discouraging, for it concerned the influence of special interests on the government.

According to Arianna, while the media may portray debates over legislation as dramatic conflicts over the public good, the sad fact is that, if legislation made it far enough to be debated, the lobbyists had their hands in it beforehand, making sure that there were enough loopholes for them to get by with what they do.  Moreover, Arianna discusses how the monetary penalties on unsafe mines and on certain polluters are far from tough, for they are not much money, in light of what the mines and the polluters make.  The problem, for Arianna, is not that there aren't enough regulatory bureaucrats, but rather that the actual oversight is not adequate.  Arianna also talks about the chummy relationship between the government and special interests, as well as the revolving door between the government and lobbies.  And, sad to say, both Democrats and Republicans are at fault, according to Arianna.

Arianna's discussion reminded me of something that I read not long ago.  I was watching the first Presidential debate in 1996 between Bill Clinton and Bob Dole, and both were touting the Kennedy-Kassebaum law as a significant step in reforming health care.  The law essentially allowed people to keep their health insurance if they lost or changed jobs, and it also addressed the issue of pre-existing conditions.  I wondered what happened to Kennedy-Kassebaum, for people still lose their health insurance when they lose or change their jobs, and how insurance companies treat people with pre-existing conditions was an issue even after Kennedy-Kassebaum.  According to Mike Lux's post on OpenLeft, the law had loopholes.  Lux argues that, if the health insurance industry accepts a certain law, then that's a fairly reliable indication that the law will not bring about reform.  True reform would make the insurance companies kick and scream!  

So is there any hope?  Some would say that we should not expect much out of this carnal political system but should wait for Jesus to come back and set things right.  But there are countries with health care systems that work, systems that are (in my opinion) more humanitarian that what the U.S. has.  Could we move towards their kind of system?  I don't know.  The special interests are strong in the United States.  Moreover, some of these other countries got the system that they have now by necessity----Howard Dean says that Great Britain, for example, decided to have government-funded health care in the aftermath of World War II, as people needed to be treated, and it stuck with that system ever since.  We don't have that history, however.  Rather, in our history, Harry Truman proposed national health insurance, and it was killed.  But there have been some glimmers of hope, such as Medicare, which emerged because private health insurance companies were not sufficiently taking care of the elderly (see here).

Arianna Huffington's Third World America 4

I'm still reading Arianna Huffington's Third World America: How Our Politicians Are Abandoning the Middle Class and Betraying the American Dream.  What impressed me in my latest reading was that Arianna was not chained to a particular ideology.  Although she is believed to be on the Left, she said some things that would resonate with a number of conservatives: that the federal government botched up Katrina, and that the teachers' unions inhibit educational progress.  But she also criticized President Barack Obama from a liberal perspective, contending that only a minority of the stimulus money goes to infrastructure, which can create jobs and is badly needed.

Arianna Huffington's Third World America 3

In my latest reading of Third World America: How Our Politicians Are Abandoning the Middle Class and Betraying the American Dream, Arianna Huffington tells more heart-breaking stories of people who have lost their homes or their jobs, and she also criticizes politicians.

Arianna is considered to be left-wing, and yet she criticizes both Republicans and also Democrats.  Regarding the economic crisis, she notes that both parties were involved in encouraging home sales to those who could not afford a house.  Many Democrats supported Fannie Mae and Freddie Mac, and George W. Bush and many Republicans sought to remove barriers to home-ownership in order to promote an ownership society.  Arianna also holds that Barack Obama displayed weak leadership when he supported a federal bail-out of banks and Wall Street, but did not rigorously work for a way for people who lost their homes to renegotiate their mortgages (and, according to Arianna, not everyone who lost their homes did so due to signing a sub-prime mortgage).

Arianna does note, however, that Obama tried to reverse the Contract with America's limitations on the Legal Services Corporation, "to no avail" (page 72).  Homeowners were limited in their ability to be protected from predatory lenders because they could not bring class-action lawsuits or make the other side pay for their attorney's fees if the other side lost----and that was important because the other side could then drag out the legal proceedings, thereby exhausting the homeowners' resources.  Arianna may believe that both sides are detached and more attuned to special interests than to the middle class, but she seems to hold that the Democrats are a little better than the Republicans.

Arianna Huffington's Third World America 2

In my latest reading of Third World America: How Our Politicians Are Undermining the Middle Class and Betraying the American Dream, Arianna Huffington described the problem of the declining middle-class and tried to explain how we got to this situation.

I think that she did a good job in describing the problem, as she put into words people's fears, cited statistics, and told people's stories.  Essentially, she painted a picture of children not making as much as their parents, of the elderly having to choose between food and their medication, and of people having to work at Walmart and McDonalds for minimum wage.  She also talked about the shenanigans of companies that set up their headquarters overseas so that they can dodge unemployment insurance and taxes for Social Security and Medicare, thereby screwing their workers.   

But, at least in what I have read so far, Arianna could have done a better job in explaining how we got to this point.  She believes that Ronald Reagan's tax cuts for the rich were a big part of the problem, and she argues that the 1980's was a time when the wages of the middle-class became stagnant, even as the rich became richer.  She does not agree with Reagan undermining the social safety net, and she also holds that the increasing trust in free-market capitalism during the 1980's was problematic.  But I wish that she explained more explicitly how exactly Reagan's policies led to a stagnation of wages.  I'm not saying that they didn't, but I'd like to see the steps from "Reagan's policies" to "the stagnation of wages".  Maybe she'll get more into that as the book progresses.

On page 53, Arianna discusses such 1980's phenomena as the polarization of labor into high and low-paying jobs at the expense of middle-wage jobs, technological changes, outsourcing, and the decline in manufacturing.  She says that productivity was rising, but "the wages of the average worker remained flat" (page 53).  Arianna appears to differ here from Mitt Romney, who holds that productivity leads to a better standard of living for many Americans.  According to Arianna, that is not necessarily the case, at least for the average worker.

Arianna Huffington's Third World America 1

I started Arianna Huffington's Third World America: How Our Politicians Are Abandoning the Middle Class and Betraying the American Dream.  In my latest reading, Arianna argues that the decline of manufacturing jobs in the U.S. and their replacement with jobs in the service sector does not help the American economy.  First of all, manufacturing jobs have traditionally been the jobs that have put Americans into the middle-class and "kept them there" (page 20).  Second, it is the manufacturing sector that actually produces stuff.  How can we export goods that other countries can buy, when there is a decline in the U.S. in the kinds of jobs that produce those goods?  As Arianna says on page 21, the financial sector is "supposed to serve our economy, not become our economy."

Like Mitt Romney, Arianna Huffington is for increased productivity.  I doubt that Arianna would support Romney's technique of creative destruction to do so, however, for she tells heart-wrenching stories about people in the middle-class who have lost their jobs.  I wonder what she would say to the right-wing argument that unions, taxes, and regulations encourage American manufacturers to export their jobs to other countries.  If that is the case, I'm curious as to how the right-wing would expect for the U.S. to compete, period, since it would be scary if American workers were paid as low as workers in other countries, and cheap labor is a reason that other countries are attractive to companies looking for a place to set up shop.

At the same time, I vaguely recall reading in an economics book that it's not just cheap labor that makes a business competitive----it's also productivity, and that's why American companies have been fairly competitive in the past.  Is there a way for businesses to be productive with unions, taxes, regulations, and decent wages, and without creative destruction?

The New New Deal: Slate's Interview with Michael Grunwald

Time Magazine correspondent Michael Grunwald has a new book out about President Barack Obama's stimulus, The New New Deal: The Hidden Story of Change in the Obama Era.  Click here to read Slate's excellent interview with Grunwald.  In this interview, Grunwald discusses such issues as where Obama's stimulus succeeded, where it's been inadequate, where it resembles the New Deal, and yet how a New Deal like that of the 1930's is not entirely feasible today.  Grunwald also touches on GOP inconsistencies regarding stimulus and Keynesianism.  Grunwald argues that the stimulus has had concrete results, particularly in the area of green energy.