Two Illinois Victories

by Chris Sturr | May 27, 2015

Last month (in this post) I blogged about Doug Henwood’s great interview with Jane McAlevey and her comments about billionaire Illinois governor Bruce Rauner and his relentless campaign against labor.  Since then, Rauner has been handed some stinging defeats, which is great news.

First, the Illinois Supreme Court ruled unanimously that the state’s 2013 pension overhaul (under the previous, Democratic Governor Pat Quinn) is unconstitutional. From the NYT piece (Illinois Supreme Court Rejects Lawmakers’ Pension Overhaul):

All seven members of the state’s highest court found that a pension overhaul lawmakers had agreed to almost a year and a half ago violated the Illinois Constitution. The changes would have curtailed future cost-of-living adjustments for workers, raised the age of retirement for some and put a cap on pensions for those with the highest salaries. But under the state Constitution, benefits promised as part of a pension system for public workers “shall not be diminished or impaired.”

“Crisis is not an excuse to abandon the rule of law,” Justice Lloyd A. Karmeier wrote in an opinion. “It is a summons to defend it.”

So even in our plutocracy, if the state constitution says, clear as day, that you can’t do something, then you can’t do it. Here’s the article on this from the Tribune: Illinois Supreme Court rules landmark pension law unconstitutional.

Our friends at the Chicago Political Economy Group (CPEG) rightly view this as an opportunity to push for the “Lasalle Tax,” a Chicagoans call the transaction tax, aka Tobin tax, applied to Chicago trading. Here’s CPEG’s Ron Baiman (via the CPEG email list):

As many predicted, see:  http://www.cpegonline.org/2014/01/16/illinoiss-new-class-based-pension-math/ [posted at the D&S blog here –CS]

I don’t think there is any viable solution left that could raise the multi-billions needed to dig the state and city out of their financial holes other than a LaSalle Street tax  (see: http://www.cpegonline.org/2015/03/22/restoring-chicagos-fiscal-and-economic-health-a-cpeg-report-on-options-for-the-citys-next-mayor/ ).  Again, the link above explains in great detail why an LST would not cause the traders or exchanges (or their switches) to move out of state and would be perfectly legal (New York State already has a local  FTT – though it unfortunately gets rebated back). The LST would be the least painful, most practical, most politically popular, and fairest and most beneficial in terms of economic justice and restructuring the overall economy, of any option that I think of.

The other great defeat for Rauner’s anti-labor agenda was that right-to-work, which Rauner was trying to impose on public workers at the county level, was rejected by the Illinois house.  From the Sun-Times:  Right-to-work goes down in flames in Illinois House with zero yes votes.

 

 

 

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New Issue!

by Chris Sturr | May 17, 2015

 

Cover of May/June 2015 issue

New issue!  Our May/June 2015 issue is out (for electronic subscribers; print subscribers will get their copies in about ten days).  We have posted one article from the issue, Marie Duggan’s timely piece A Way Out for Greece and Europe: Keynes’ Advice from the 1940s. Our page-two editorial note (written this time by my co-editor, Alejandro Reuss) is an unusually good guide to the issue this time, stitching together most of the articles in the issue under the (unplanned) theme of “Reform and Revolution”:

Reform and Revolution

For mainstream liberalism, it is an article of faith that our social ills can be fixed by this or that relatively modest government intervention. There’s certainly some truth to the view that economic outcomes—especially those of so-called “free markets”—can be improved upon by well-designed public policy. Even an honest neoclassical economist should recognize many instances of “market failure,” and so the need (at least sometimes) for government intervention. But political institutions in capitalist societies are not generally arranged so as to generate the right interventions—even “sensible” public policies that would seem to benefit virtually everyone, to say nothing of those that would benefit the majority at the expense of powerful elites.
In the exercise of government power, elites often hold the trump cards. The policies adopted often exacerbate social problems, rather than reducing them. Thinking of social problems as basically caused by the misdeeds of private actors coupled with the inaction of government, then, is not generally correct.
Susanne Soederberg gives a shining example in her cover story “The Student Loan Crisis and the Debtfare State.” Soederberg argues that the “consumer protection” framing of the problem—that the solution is to get government involved to rein in the predatory practices of private educational lenders—is fundamentally flawed. The “debtfare state,” in her view, has actively facilitated such practices. Government policy has pushed higher education into debt-based financing, and the state has acted as the enforcer of student debt obligations.

Christopher J. Cooper’s “Active Culture” article, “The Crisis at Corinthian,” provides a stark illustration—exposing not only the predatory practices a for-profit college educational chain, but also the Department of Education’s harsh insistence on full debt repayment.

Junji Tokunaga’s article on the economic policies of Japan’s Prime Minister Shinzo Abe, too, illustrates this point. There has been no lack of intervention by the Japanese government to address the country’s decades-long economic stagnation. However, policies that make perfect sense from a mainstream Keynesian standpoint—expansionary monetary and fiscal policies—have gone along with others that both favor elites at the expense of the majority and are likely to impede the country’s economic recovery—like tax cuts for corporations coupled with tax hikes on ordinary people.

In her piece on the current economic crisis in Europe, Marie Duggan points to a failure of political institutions to deal with trade and debt imbalances, except in ways that are extremely costly and painful for ordinary people. Europe’s main policy-making institutions have pushed—especially on Greece—austerity policies sure to inflict great suffering on the people and likely to undermine economic growth across Europe. Duggan points out that John Maynard Keynes developed a better solution way back in the 1940s: make surplus or creditor countries spend their surpluses (rather than hoarding them), which will boost demand for goods in the deficit countries, allowing the latter to grow their way out of debt.

Both John Miller’s “Up Against the Wall Street Journal” and Arthur MacEwan’s “Ask Dr. Dollar” point out that the burning problems in the U.S. economy—how to achieve sustainable growth and good jobs for all who want them—are not economic, but political. That is, we have the resources we need to solve our problems, but they are not deployed correctly because powerful interests stand in the way. MacEwan is quite right that life in capitalist America could be improved dramatically, even “without some drastic system change,” if only these barriers to reform could be overcome.

Jawied Nawabi’s “Primer” on land reform and its importance to economic development really gets to the root of the matter. Part of the case for land reform, he notes,
is economic—for example, small farms actually produce more output per acre than
large landholdings. However, the crux of the case is not narrowly economic, but “socio-political.” Land reform is so essential to economic development because the power of large landlords stands in the way of needed development policies.

In other words, you may aim at sensible, necessary reforms. But to get those reforms, you just may need a revolution.

Not a subscriber?  Click here to sign up online–we can get you an electronic copy of the magazine pronto.

 

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