“Both, and”: America’s economy on life support
A misrepresentation is coursing through analyses of America’s economic struggle during these ‘lame duck’ days. DC decision makers are pitching that stopping the spread of COVID-19 and restoring the economy are conditionally linked: solve one and the other is a ‘gimme. The sub-text is that an anxiously awaited vaccine will halt the recession, now entering its third quarter.
If you follow this line of reasoning, I have a bridge to sell you.
An accurate portrayal of our current crisis is that America needs BOTH a cure AND a viable economy. Sure, they are connected. What isn’t connected to the divided economy? The fault line of this misrepresentation is that the question, a ‘viable economy for whom?’ , goes unanswered.
The Dow climbs on news of the vaccine and food hand-out lines are growing in the California suburbs.
November 30
Biden’s economic team is being portrayed as an EMT squad. He announced his picks today, and as a team his choices reveal an economic strategy that is primarily “people (labor) focused,” and to a lessor degree, “policy-focused”. (1) Economic “cures” will come later. Someone (Sec’y. Mnuchin) has cut off power to the “Emergency Room,” and the EMT team players are doing the best they can with the onboard oxygen tank and defibrillator, sirens blaring, hustling over nighttime streets to a dark hospital.
The “patient” is gasping for air.
December 1, the morning after Biden’s announcements.
If all Republican Senators can complain about Biden’s economic team nominees are OMB Director choice Neera Tanden’s tweets (2), this is not a good sign for “bi-partisan” participation in salvaging the American economy. During Trump’s reign Republicans have bought into Trump’s ‘cut taxes and reward the rich’ policy for rescuing the economy, yielding to the Democrats austerity responsibility. Media pundits portray both parties as switching traditional roles in fiscal governance.
December 2
Fiscal policy is the framework of the new Biden economic policy team. Secretary of Treasury nominee Janet Yellen comes out of the economic school of labor rights protection. Heather Boushey, one of Biden’s nominees to the Council of Economic Advisers (CEA) advocates for working family income protection. “Anti-Bernie” nominee Tanden is a former HRC operative, “corporate Democrat,” and anti- austerity apologist, twittering recently “We should not have to clean up their (Republican’s) mess.”
On balance Biden’s picks (3) are Obama era holdovers. In another sense, they are different folk, reflecting different economic times. Biden wants to expand the traditionally Democratic Party aligned. blue collar base and on paper satisfy progressives’ claims. In 2008 Obama and Geitner, taking cues from Wall Street, were trying to stop the bleeding: different times, different audiences. Biden’s economic adviser choices are ‘kitchen table’ economists, not Wall Street savvy technocrats. None hail from the “progressive wing” of the party which is troubling to Progressives but not surprising given the political delicacy of the moment.
Recently an analysis of why a federal minimum wage of $15 is a bad idea surfaced in these screens. According to the writer, raising the federal minimum wage to middle class survival level will hasten layoffs and kill innovation. When did we hear this before? About every time raising the federal minimum wage is proposed. The argument goes, ‘Pay ‘em more and they’ll ask for more and end up “on paper” doing less.’ Profitability will sink, workers will be laid off. A ‘deep dive’ into this zero sum argument yields a misplaced view of human nature, not an accounting of human suffering. More later.
Some propose that the discipline of economics is BOTH the science of value AND the politics of distributing worth; BOTH building the “public good” AND resolving “private gain,” bedrocks of modern liberal economic theory. (4)
Revisiting our medical emergency metaphor we get a passing glimpse of where Biden’s choices could lead: a governing strategy of “both/and”: BOTH raising the minimum wage AND funding education; BOTH removing debt AND regulating borrowing industries; BOTH regulating banks AND supporting green investing.
BOTH saving the patient AND targeting the illness.
Memo to Mr. Biden, President-elect: BOTH progressive looking agenda AND a re-centering of the political discourse which means a tug to the left.
BOTH the voters AND the jury are still out.
December 1–4
1 -“Economic Team Suggests Focus on Work Force ,” NY Times, December 1
2 -The Manchester Guardian reported on Dec. 2 that Tanden had flushed 1000 tweets.
3 -Besides Yellen, Boushey and Tanden are Jared Bernstein, nominee for CEA and Cecilia Rouse, nominee for Chief Economic Adviser.
4 -See specifically John Kenneth Galbraith, “The Affluent Society” and “The New Industrial State,” also Robert Reich, “The Common Good.”
