New Issue! Plus: Regional economic disparities and Hillary Clinton’s Unfortunate Remarks

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Our March/April issue is at the printers (and in e-subscribers’ inboxes). (Not a subscriber yet? You can subscribe now here!)

We just posted an article from the new issue–Jerry Friedman’s “Economy in Numbers” column, Growing Together, Flying Apart: Regional Disparities in American Politics and Economics.  Coincidentally, it provides excellent commentary on the remarks Hillary Clinton made recently, to great controversy, characterizing the parts of the country she won in the 2016 presidential election compared to those won by Trump:

“If you look at the map of the United States, there’s all that red in the middle where Trump won,” Clinton said. “I win the coast, I win, you know, Illinois and Minnesota, places like that.”

“I won the places that represent two-thirds of America’s gross domestic product,” she continued. “So I won the places that are optimistic, diverse, dynamic, moving forward. And his whole campaign, ‘Make America Great Again,’ was looking backwards.”

Jerry’s article talks about the regional economic disparities that have left Trump-voting regions (and rural parts of Clinton-voting regions) behind, and the political consequences of those disparities.

Here is the editorial note for the issue:

This Is Your Economy on Finance

The Dow Jones Industrial Average reached an all-time high of 26,616 points on January 26 of this year. That was after rising almost 8,000 points since Donald Trump’s inauguration. The Dow then fell over 2,700 points in early February, which met the technical definition of a market correction—a drop of at least 10% from a recent high. Since then, the Dow and other indices have gone up and down, but mostly up, since the correction.

What does this mean for the rest of us, and what does it tell us about the economy? Much of the business press would like us to think the rising stock market is good news for the economy; that was President Trump’s message in his first State of the Union a couple of weeks before the correction. But the business press tipped its hand when it explained the correction as markets’ reaction to lower unemployment and a minor uptick in wages. Why would investors consider wage increases bad news? According to John Miller, it’s all about class conflict—and about the disconnect between stock market investors (and stock values) and workers on “Main Street.” Even slightly higher wages lead investors to fear higher labor costs and inflation. But workers’ share of output remains low, and corporate profits continue to be at record highs—numbers which “reveal the unwillingness of the financial powers to share with workers the gains of economic growth.”

In the second part of her three-part series on deindustrialization in Keene, N.H., Marie Duggan gets into more detail about the adverse effects of a financialized economy, and its tendency toward financial bubbles, on workers. The story of how a local company, Miniature Precision Bearings, was acquired by a much larger company, Timken, shows how asset bubbles and financialization have contributed to deindustrialization and job loss. When management spends its accumuated capital manipuating stock price, the math means there will be less capital available for investment in the equipmient and people to produce quality product. The financial bubble of the 1990s seemed so great at the time with the rising value of pensions, but it turns out that the market wasn’t raising funds for industry, but rather was persuading industry to abandon product quality and investment in the company, workers, and community. The backstory of the decline of rural America may be the giant sucking sound of the stock market removing funds from the industrial base into stock price manipulation, given the 1990s bubble. This is all the more ominious, given that the rise of the stock market under Trump gives every appearance of being a bubble itself.

Gerald Friedman’s Economy in Numbers column in this issue tells a related story of regional economic disparities and their political consequences. As Friedman points out, federal policies favoring Wall Street have been better for urban areas on the coasts, but have contributed to deindustrialization and lagging income growth in other regions (and, as we see from Duggan’s article, non-urban parts of coastal regions are also falling behind). Both political parties’ embrace of neoliberalism has eroded the safety net and has neglected industrial policy.

This issue’s cover story suggests an alternative understanding of finance and monetary policy that could point to a way out of neoliberal economic policies that have led to these regional disparities and to widening inequality. Modern monetary theory (MMT) addresses the connection between lending (and debt) and money, and undermines the standard views of taxes and deficits that justify austerity policies. MMT points to a way to stimulate the economy by providing the finance and credit people need to buy products, and that businesses need to be able to sell their products, and in that way moving economic policies beyond austerity and deficit fear-mongering. The MMT approach could finance government policies—including infrastructure spending, direct job-creation, national health care, and industrial policy—that would lead to full employment and greater equality.

Also in this issue: Arthur McEwan tallies up the economic costs of Puerto Rico’s ongoing crisis, Noah Berlasky lays bare the neoliberal foundations of the self-help literature, and more!

New Issue!

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Our January/February issue is finally out–sent to e-subscribers a couple of days ago, and in the mail to print subscribers.  We most recently posted David Bacon’s contribution to the issue, What Trump Can and Can’t Do to Immigrants, especially timely given Trump’s recent executive orders.

Here is the issue’s editorial note:

Arise!

If you’ve just awakened from a Rip Van Winkle-like sleep, you should probably stay lying down for a little while. You’re in for a shock.

A presidential candidate who slandered Mexican immigrants as criminals and rapists, claimed a Mexican-American judge was inherently biased against him, called for a ban on Muslims coming to the United States, called for compulsory registration of Muslims in the country, boasted of sexually assaulting women, insinuated that gun advocates might assassinate his opponent, and pledged to abide by the election result “if I win” … was elected president.

Here’s another shocker. Who among us expected to hear the Republican nominee for president—just four years after the party’s nominee was private-equity mogul Mitt Romney—say the following, as Donald Trump did in a October 2016 speech? “The establishment has trillions of dollars at stake in this election. For those who control the levers of power in Washington and for the global special interests. They partner with these people who don’t have your good in mind. … It’s a global power structure that is responsible for the economic decisions that have robbed our working class, stripped our country of its wealth and put that money into the pockets of a handful of large corporations and political entities.”

The leading figures in the mainstream of the Democratic Party certainly did not expect an adversary raging against corporate globalization (even with the anti-Semitic dog whistles audible in Trump’s denunciations of the “global elite”). For decades, leading Democrats had bought into the neoliberal economic agenda, steering away from policies that could get them branded as “anti-business.” They derided criticism from the left as juvenile and quixotic, not dreaming that they would be outflanked on the right by a populism like Trump’s.

The analysis by liberal and progressive commentators since the election has focused largely on why Trump won and what it says about the country. We have to remember, however, that election results are not revelations of the national soul—especially not under the United States’ non-majoritarian presidential election system. The overt racism, nativism, and misogyny of Trump, his allies, and supporters are important facts about the United States today, but they are not the singular truth about the country or its people.

Yet there is nothing to be gained by minimizing what Trump has conjured. He tapped into widespread sentiments of grievance in a manner typical of right-wing populists: simultaneously directing his supporters’ ire at (some of) the wealthy and powerful and (some of) the poor and marginalized—blaming both, jointly, for the ruin of the country. The people Trump speaks to and claims to speak for are overwhelmingly white, predominantly male, and the grievances to which he gives voice are not simply those of workers and poor people in general. They are, rather, the particular grievances of those who recoil at gradually sinking into a mass they see as beneath them.

The articles in this issue attempt to dig deeply into both what has gotten us to this point, and what are possible ways forward.

Our cover article for the issue, by political scientist Sasha Breger Bush, argues that what we’re seeing is not the end of neoliberalism, but rather its transformation, from globalized neoliberalism into “national neoliberalism,” and its culmination: a corporate capture of government now more complete than ever.

Steve Pressman and Gerald Friedman both add depth to our understanding of Trump and what he represents. Pressman explains Trump in light of the squeeze on “middle class” incomes and the rise of economic inequality. Friedman adds to his previous analysis of American nativism (the November/December 2016 cover story) an “Economy in Numbers” on U.S. immigration in the current era.

David Bacon and Frank Ackerman, meanwhile, turn from retrospect to prospect. What does the coming period hold in store? Bacon focuses on immigration policy, noting the constraints under which a Trump administration will operate. Even in an era of increased border enforcement and deportations nationwide, Bacon argues, immigration policy will continue to be driven by employers’ need for a cheap and controllable labor force.

Meanwhile, Ackerman looks at the prospect for meaningful climate action, even with the Denier-in-Chief in the White House. He argues for a consortium of U.S. state and local governments—a “Green-State America”—committing to meet the emissions-reduction goals set down in the Paris climate agreement. “And this could be a model for other issues,” he concludes. “Green-State America might also want to support international treaties on the rights of women, the treatment of migrants, the rights of indigenous peoples, and more.”

To be sure, there will be many struggles ahead. Time to arise.