Freedom from Want 2

In my latest reading of Freedom from Want: American Liberalism and the Global Economy, Edward Gresser talked some about the history of trade and protectionism.

Gresser made the point that trade is good because other countries make some things better and more efficiently than we do, and we make some things better than other countries, so it's beneficial to all sides to let them stick with what they're good at and to trade.  Moreover, according to Gresser, protectionism makes foreign goods more expensive, with the result that consumers have less money to spend on other goods, thereby hurting the economy.  Gresser also points to places that tried to be self-sufficient and to cut themselves off from the outside world----Sparta, North Korea, etc.----and he believes that we should not want to be like them.  I'd like to see better arguments for why a country should not try to be self-sufficient, and yet I can see Gresser's point that we're better off importing certain things.  Coffee comes to my mind.

Gresser then talks about American history.  As Gresser notes, trade was a significant part of America's early days.  The Declaration of Independence criticizes the British for hindering the thirteen colonies' trade with other countries, the American flag consisted of imported goods, Thomas Jefferson promoted free trade as something that would be conducive to prosperity, and Thomas Paine thought that trade would lead to peace.  But Gresser says that there were strong protectionist voices, such as Daniel Webster, Henry Clay, the Whigs, and later the Republicans.  Like the leftist critics of free trade today, protectionists in America's history feared that free trade would drive down American wages because American workers would have to compete with foreign workers (in this case, in Europe), who were poor because they were not paid much.  But another reason that protectionists liked tariffs was that they were an easy and convenient source of government revenue, and the Whigs and early Republicans supported public financing (of infrastructure, for example) as a way to stimulate the American economy.

Moreover, whereas Lou Dobbs presents outsourcing as a devastating outcome of corporate influence on the U.S. government, Gresser notes that protectionism in America's history tended to coincide with a relationship between government and business interests----since the special interests back then were the businesses that wanted to be protected from foreign competition.

It will be interesting to read Pat Buchanan's The Great Betrayal to get his take on protectionism and free trade in America's history.  I wouldn't be surprised if some of the Founding Fathers supported trade as a general principle, while also practicing protectionist policies every now and then.  Such inconsistency or pragmatism is possible, for Ronald Reagan was believed to be a free trader, and yet, as Phyllis Schlafly states, he "imposed tariffs on motorcycles to protect Harley-Davidson and on electronic products from Japan" (see here).

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" 5: Illegal Immigration

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 talks about illegal immigration.  Dobbs argues that illegal immigrants drive down wages, and that big business largely supports their presence in the United States because they are cheap labor.

What should be done about illegal immigration?  I don't like the idea of simply building a big wall to keep out illegal immigrants from Mexico, for many of them are escaping dire poverty and are looking for opportunity.  So should we resort to amnesty?  That's not particularly fair to those who wait in line to become American citizens----and there are a number of people who play by the rules who themselves come from bad circumstances.  Should we have open borders?  What would happen if terrorists entered the U.S.?  Should we have a guest worker program?  That can drive down wages, if I understand the program correctly, for businesses could pay their foreign workers low wages and refrain from offering them benefits.  Maybe the solution is NAFTA, which can lift up Mexicans out of poverty through capitalism.  But, as Lou Dobbs argues, poverty is still a problem in Mexico, even after NAFTA.

Dobbs states that Mexico is poor even though it has lots of resources.  Is there a way for Mexico to use its resources to become richer?  Can we encourage Mexico to do that?

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" 3: Both Sides?

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 criticizes how the news media feel they are doing their job by featuring both the Republican and the Democratic sides in the name of balance, rather than digging deeply into issues.  On page 91, Dobbs says glibly:

"The truth stands by itself.  The idea that fair and balanced is a substitute for truth and fact is mindless nonsense that has captured too much of the national media.  There seem to be only two sides, both political, to every story.  Does that mean that if we had three major political parties there would be three sides to the truth?  If we had four parties, would there be four sides?"

I used to be more of an advocate of a "fair and balanced" news media.  I felt that the media were too liberal and should feature both Democratic and also Republican perspectives.  When I was in high school, I wrote letters to my local newspaper against Channel One, a news program that students were required to watch each morning.  I thought that Channel One was biased towards the left and did not include an adequate number of conservative voices.  Over time, however, it did appear to make more of an effort to be balanced.  James Dobson and Beverly LaHaye were interviewed, and, in a retrospective about the Vietnam War, students in a fictional 1970's classroom were debating the war, as some defended it and others criticized it.

But "fair and balanced" media can get on my nerves, to tell you the truth.  When I got cable, I was excited that I could finally watch Hannity and Colmes on Fox News.  When there were debates about public policy on Fox News, then that could get interesting.  But where I got annoyed was when Sean Hannity (the conservative) would accuse liberals of doing something wrong, and Alan Colmes (the liberal) would then retort that conservatives have done the same wrong thing, or when one side acted as if the other side were to blame for our country's ills----as if life is that simple.  In my opinion, those debates really went nowhere.

While I enjoy debates on public policy, however, maybe Lou Dobbs has a point that even those are flawed, in terms of how the mainstream media in the U.S. present them.  Why should we assume that Republican and Democratic ideologies are the only ways to see the world?  There are other ways, as well.  There are ways that are further left or further right, or even independent.

Lou Dobbs' "War on the Middle Class" 2: Medicare Advantage

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 goes into a variety of issues: that roughly half of federal income taxes are paid by the middle class; how corporations dodge taxes; how the influence of certain lobbyists encourages corporate outsourcing, which hurts workers; and how the bankruptcy law inflicts pain on a lot of responsible people who are bankrupt due to high medical costs.

(UPDATE: See here for Walter Williams' argument that the rich pay most of the federal income taxes.  Moreover, according to this article, Dobbs was critical of President Obama's proposal to raise taxes on those who make over $250,000 a year.)

What I want to focus on in this post, however, is what Dobbs says about government subsidies for health insurance companies and health care organizations.  On page 41, Dobbs states the following:
"Health care is too expensive for many families, and more and more companies are opting to drop full coverage from the benefits they offer employees.  Yet our government is giving $10 billion in subsidies and risk-sharing payments to insurance companies and health care organizations that sign on to the nation's Medicare program, which the Bush administration revamped in 2003.  That money goes to businesses that are part of the problem, not to the working men and women who need the help."

Dobbs is probably talking (at least in part) about Medicare Advantage, which is something that President Barack Obama's health care plan would cut.  Paul Krugman states regarding Medicare Advantage and the Affordable Care Act (see here):

"Medicare Advantage is a 15-year failed experiment in privatization. Running Medicare through private insurance companies was supposed to save money through the magic of the marketplace; in reality, private insurers, with their extra overhead, have never been able to compete on a level playing field with conventional Medicare. But Congress refused to take no for an answer, and kept the program alive by paying the insurers substantially more than the costs per patient of regular Medicare. All the ACA does is end this overpayment."

After Paul Ryan was selected as Mitt Romney's running-mate, I watched a video in which Ryan was talking to President Obama about health care.  I did not understand everything that Ryan was saying, but Ryan did criticize the cuts to Medicare Advantage, since there are seniors who are enrolled in that, and Ryan seemed to fear that the cuts in Medicare Advantage would result in a reduction in their benefits.  What Ryan was saying baffled me somewhat----here's a Republican who is a big proponent of cutting government spending, and all of a sudden he's concerned about how a government cutback will affect people.  But I wonder if Ryan is right.  I don't care for corporate welfare, but I also don't want to see people's health care get cut.  Even if the government, by ending its overpayments to Medicare Advantage, is aiming to tackle the high cost of the companies' overhead, is there any assurance that the health insurance companies will reduce overhead rather than health care?  Since it's cheaper for Medicare to pay for patients than for Medicare to give money to private health insurance companies (at least according to Krugman and the articles to which he links), why not have Medicare take over Medicare Advantage and run it itself, without the private health insurance companies?

I've long wondered why Republicans----even Republicans who are big on reducing government spending, such as John McCain and Paul Ryan----were opponents of the government reducing its subsidies to private health insurance companies.  That made no sense to me.  Now, I think I understand a little better: Medicare Advantage was intended to exemplify the conservative principles of choice in health care and competition.  But, according to critics, it's turned out to be expensive and inefficient corporate welfare.

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 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.