The Zero-Sum Politics of a Slow Growth Era
Thinking about Ron Brownstein’s article from over the weekend, about current Republican governors being much more united in their opposition to Obama than 1990s-era GOP governors were with respect to Clinton, it struck me that this is exactly what you’d expect politics to look like in a world of low-to-zero real growth expectations. Which happens to be the world we pretty much live in, at least in this country.
The big Obama Administration initiative that the GOP governors are so unified in opposing is the health-care law. You can make an argument that this law – if it works – is a pro-growth initiative. That by planting the seeds of a real individual insurance market, it begins the process of decoupling health insurance from employment, increasing labor market flexibility and making it possible for more people to commit to an entrepreneurial career path. That by providing health insurance to more of the uninsured, it will reduce the drag that ill health poses on their productivity. That, by restraining spending over time on some of the least “productive” kinds of health expenditures, it will free up resources both for more productive uses, whether in health care or in other sectors. And so forth.
That’s if it works – and if its reforms are extended by further reform. And that’s a big “if.” What it does immediately, of course, is transfer resources from the “haves” to the “have-nots.” It takes resources from the elderly and gives them to the young, from the rich to the poor, from those with “Cadillac” health benefits to the uninsured. All of those transfers are, of course, defensible on moral and practical grounds – but it’s not surprising to see the “haves” fight back.
The big state-level initiative of the GOP governors that the national Democrats are trying to blunt is the effort to kill, or at least maim, public sector unions. The states in aggregate are in terrible fiscal shape, and unless we enter a period of rapid economic growth they will remain in lousy shape indefinitely. Somebody is going to have to lose in the huge budgetary battles in statehouses around the country. GOP governors want that “somebody” to be public sector workers who, in many cases, have seen their position improve relative to their private-sector equivalents (which, I think, is the important comparison – not whether they are over- or under-paid in an absolute sense, but whether one group of workers has been gaining or losing ground relative to the other).
This effort could also be pro-growth – if it was part of a larger effort to restructure the public sector to make it more productive. Take teachers. “More pay but less job security” is a deal that lots of education reformers would be enthusiastic about. If teaching was something that lots of decently-educated people did for 5-10 years (like becoming a drug rep, or a management consultant, or working in publishing, or any of the myriad other jobs that people mostly don’t do for their whole working lives), instead of a career where most of the benefits are back-loaded, you could actually pay teachers more, save a lot of money, and have a better-educated and more-energized cadre of teachers. But that’s another big “if.” Meanwhile, what public sector workers know is that they are being asked to give up something they have. Once again, it’s not surprising to see the “haves” fight back.
But in the absence of a period of “catch-up” growth that brings us back to something like the long-term trend, politics is going to be about cutting up the pie rather than making the pie higher. And if that’s what politics is going to be, then you’re going to see this kind of polarization, as the “haves” in each political coalition organize massive resistance to any attempt to take away from them what’s “theirs.”
It’s that larger pro-growth vision that’s missing from the dominant message both parties are giving. Both parties, rather, are saying something like “if we do what we’d be saying we should do anyway, growth will come.” If we cut taxes and cut spending, the magic of the free market will produce jobs. If we expand the social safety net, working people will be more secure and demand will pick up. I’m not surprised neither of these propositions are really selling all that well.
So get ready for another season of zero-sum trench-warfare politics.
This is what I don’t buy any more. If my neighbor’s house is burglarized, that doesn’t mean that my house should be burglarized as well to make things “fair.” It means I was done an injustice.
And I also thought that comparing the relative ground between different workers was “class warfare” when done between the richest of the rich and the middle and lower classes. We’re supposed to recognize that the very rich produce tremendous value and take substantial risk, and should be compensated accordingly. We shouldn’t begrudge the very rich their compensation just because they have the skills and moxie and inclination to pursue a more lucrative career than we did.
That we have reached a point where a respectable commentator can base a post on the assumption that schoolteachers and other public employees are the “haves” tells a lot about how successful the very rich have been at influencing public discourse.
In the end, I’m not so bothered if public employees have better benefits than I do. I am bothered that CEO’s and hedge fund managers make several times what I do when there added value is less than apparent.
If we’re going down the zero-sum road. I’d rather go after their part of the pie than the public workers’
— JohnMcG · Mar 1, 05:35 PM · #
To summarize, I reject the narrative that the Wisconsin debate is about the “haves” protecting their privileged status.
I think it’s about us as a society deciding how we are going to treat workers. For the past several years we have allowed that to deteriorate, in part because we’ve believed a story that it was necessary for us to “compete” and to enable growth. IMO, the financial crisis dealt a fatal blow to that tale.
The state budgets make this explicit. It doesn’t get much more middle-class than a schoolteacher. By changing the workplace benefits we are re-defining what it means to be middle class, which will apparently include having to scramble for health care benefits and retirement.
Maybe some of those adjustments need to be made. But I guess I haven’t noticed such a dramatic change in what it means to be “rich.” So, I’m going to wait to see that before I sign off on lowering what it means to be middle class.
— JohnMcG · Mar 1, 05:48 PM · #
JohnMcG: did I argue in this post that we need low taxes on hedge fund managers to promote growth?
I’m increasingly of the view that a huge percentage of modern finance produces negative value. Solving the problem of overdominance of the economy by the financial industry, though, is harder than you seem to think.
— Noah Millman · Mar 1, 05:53 PM · #
They’re still passing anti-immigrant bills in Arizona, with legislators trying to one-up each other to see who can do more to harass their gardeners and handymen out of the state.
In Congress, the budget axe gets swung with reckless abandon and ends up landing in … abortion politics and (before they were shamed into removing it) redefining rape.
GOP governors sue to block a health care reform bill three years from implementation even though they can experiment with how they deliver services.
GOP governors seek to make the middle class angry at … other people in the middle class instead of raising taxes or cutting tax expendatures on the rich.
If movement litmus-test RINO-hunter conservatism allows for the existence of a cool-headed budget balancer who doesn’t dive deep into the ledgers without popping right back up with a culture war issue, it hasn’t done a good job of showing it. Just look at how the movementarians been attacking Mitch Daniels.
We wanted tell-it-like-it-is tough love accountants and we got the same old culture warriors.
— rj · Mar 1, 05:53 PM · #
I’m quite sure it’s hard; we need to do it anyway.
It is relatively easy to channel people’s resentment about the decline of the middle class toward public employees; that’s why leaders are doing that instead of confronting this more difficult problem.
But I’m not inclined to let them get away with it. Nobody said being a leader was easy.
— JohnMcG · Mar 1, 06:06 PM · #
I think the comparison falls down some when it comes to the difference between:
That’s if it works – and if its reforms are extended by further reform.
and
This effort could also be pro-growth – if it was part of a larger effort to restructure the public sector to make it more productive.
The difference is that the health care approach has a vision that’s distinct from trying to get more power. If you remember the fight about the Cadillac plans, some union groups opposed those cuts because in general union jobs are more benefit heavy. Thus, some parts of the bill cut against the Democratic power base in an attempt to reduce the tax incentives for higher health care spending. Gov. Walkers effort could theoretically be paired with something like that, but to instead reducing the bargaining clout of unions.
The Democrats may well be wrong and it is universally admitted that health reform requires follow-on efforts. However, as part of the fight they tried positive-sum ideas that cut against zero sum thinking. Gov. Walker has made no such attempt to my knowledge.
— Greg Sanders · Mar 1, 08:52 PM · #
Mmm, real echo chamber here. Very New York.
— y81 · Mar 1, 09:45 PM · #
Noah:
I have so many problems with your post I don’t know where to begin, but let’s start here:
Please explain what you mean by a real individual insurance market…
— jd · Mar 1, 10:01 PM · #
Noah- If incentives matter, shouldn’t higher pay for teachers result in higher quality teachers? Is there some reason to think that this is not true for teachers while it is seen true for many other professions?
Steve
— steve · Mar 1, 10:45 PM · #
Greg: not sure who you’re arguing with – I didn’t write a post defending Gov. Walker. But I will quibble with your equation of “taking on your own interest groups” with “positive-sum ideas.” The former is admirable, and probably necessary (for both parties) but that’s not what positive-sum means.
jd: an insurance market where it is economically feasible to for an individual to buy insurance.
Steve: not sure who you are arguing with. Did I write a post advocating paying teachers less?
— Noah Millman · Mar 1, 11:11 PM · #
Noah: I seem to have been assuming more equivalence than you were arguing for, so I’ll drop the larger point and go to the quibble.
It would be reasonable to view the Cadillac tax as a victory of the deficit hawks amongst the Democrats over the union faction. But I think that assessment would also be inconsistent of the analysis that the Democratic party was saying “if we do what we’d be saying we should do anyway, growth will come.”
How much do you think the messaging actually matters here? Obviously the health care bill hasn’t been a public relations success for the Democrats, but ultimately I tend to buy the argument that it will be the reality of whether conditions are relatively improving or not that will drive whether we’re in a zero-sum world or a distributing the gains from growth world.
— Greg Sanders · Mar 2, 12:13 AM · #
Noah:
the next obvious question is: How is Obamacare planting the seeds of a market where it is economically feasible for an individual to buy health insurance?
— jd · Mar 2, 02:00 PM · #