Posture or Policy?

The media seems to be abuzz with the new and revitalized Obama. He is everywhere proposing all sorts of policies that are bright and shiny. More to the point they have a distinctly liberal sheen.

Take his proposed tax changes: raise taxes via a numbers of small changes to the tax code on the rich, and then reduce them and/or bolster a variety of tax credits for the less well off. Terrific in principle. Obama is taking aim at inequality.

Wonderful. I wonder what took so long? And why did he wait until his programs have practically no chance of getting enacted because the Republican snow control the entire legislative process? Why didn’t he go on this kind of offense before the mid-term elections when any political advantage the proposals may produce would have helped staunch the flood towards the right?

Is he just a wimp? Or is he just playing games?

In the past week or so Obama has been on a crusade with a leftish sounding agenda: paid family leave, free community college, bolstering consumer protection laws, finagling finance for infrastructure investment, and now the tax package. This is an aggressive – for the US – set of proposals. They would help a lot of people and might start to undo the thirty years of damage accrued during the Reagan era.

So I ask again: why now?

It isn’t as if he is running to be re-elected, and the Democrats are in disarray with no distinct policy set that isn’t tainted by being merely not as crazy as the Republicans.

Is he attacking a problem?

The problem for the economy is straightforward: we need programs like those Obama is proposing. It would have helped had he had the spine to propose them back when they would have had the greatest impact – let’s say some time in 2009/2010. But we will take what little we can get. No, the issue is much deeper. We need a lot more. We need to deal with risk.

Obama is an inveterate tinkerer. He is not a reformer. Even his signature health care reform was a half hearted copy of a right of center think tank plan. He loves details and getting into the weeds. He is not a great thematic actor or narrative changer. He talks big and does small. The trouble is that we won’t get these programs. We will get something else. Which might be very different. Indeed what we get is highly unlikely to resemble much of what the media is now breathlessly hailing as the ‘bold new Obama approach’.

This is because our political process is designed, from the ground up, to prevent a decisive agenda from ever getting into law. Except under extreme circumstances and especially when the entire process is bought and paid for by a privileged few who happen to be the same few who would be damaged economically by that agenda.

I think the current economic malaise felt by the mass of Americans is the deliberate consequence of thirty years of policy. It isn’t an accident. Nor is it some odd unintended consequence that no one could have predicted. The drive towards inequality and the undermining of democracy was instigated and enabled by the adoption of orthodox economic thinking which just so happened to match perfectly with a desire by big business and others in the elite to secure an ever greater share of our national wealth. It was, as it were, a match made in Chicago, where that university’s economics department acted as a leader for the promulgation of anti-middle class policies wrapped up in a pseudo libertarian banner.

Freedom to choose, as Milton Friedman so passionately wrote about, is generally a good thing. But it counts for naught if your choices are successively constrained and then throttled by your inability to act on the economic stage as a dignified and equal partner. If others can gradually seize more and more power and tilt policy ever more closely to their own interests and away from yours, then all the freedom in the world cannot offset their advantage.

If, for instance, the value of your guaranteed retirement plan is suddenly undone by rules turning it into a simple savings plan where the only surviving guarantee is how much you put in and not at all about what you get out, then your risk in life has risen.

If, for instance, work rules are biased so that employers can fire at will, eliminate collective bargaining, and arbitrarily reduce wages whilst you have no recourse, then your risk in life has risen.

If, for instance, you find social pressure rising to reduce the government safety net that protects you against the uncertainties of the economy, then your risk in life has risen.

If, for instance, you discover that bankruptcy laws have been re-written by the banking industry to make it harder for you to get relief from debts you incurred innocently in some health related emergency, then your risk in life has risen.

And if, for instance, that this accumulative increase in risk piled over years onto your household is not compensated for by your employer because of their relentless pursuit of something called shareholder value, not only has your risk in life risen, but you have no means to displace it and maintain your standard of living.

Not only has median income in America floundered because big business and our elite have secured a greater share of our national wealth, but on a risk adjusted basis – that is if we compare the median income with the various risks that a wage earner faces – then we see that it hasn’t floundered. It has sunk.

Thus the malaise.

We don’t measure household income on a risk adjusted basis. But you can bet that businesses and the wealthy are acutely aware of their own risks and make sure those risks are covered by ample cash. In other words, not only do they scarf up huge chunks of our national wealth, but they make sure that any potential downside is covered too. They make sure they have adequate insurance so their standard of living is protected.

Most people, whether they are aware of it or not, rely on the government to provide that kind of insurance. Not just explicit insurance with things like Social Security, but also implicitly in the myriad of other programs that mitigate the hidden and often totally unknown sources of downside that everyone faces as they chart their way through life.

So, if Obama was really trying to ‘go big’ in his last two years, he would go back and pay attention to all those programs he and his predecessors have put in place that add risk to the daily lives of everyday people. And he would undo the most egregious.

Tinkering and proposing programs that are unlikely ever to get legislated into place, at least as expressed in fancy presidential speeches, is not policy making. It is posturing.

And we don’t need more posturing. It is time to act.