Economy

For millions of adults, the training and education needed to achieve the American dream is unavailable, putting the strength of the economy in jeopardy, too. At at time of intense overseas competition, a lower percentage of the workforce is graduating high school than it did 40 years ago. And about half of the adult workforce doesn't have the basic skills and education that are increasingly required to get good jobs. Responding to the scale and gravity of the problem, National Commission on Adult Literacy has new vision for the adult education and skill development system (full report and summary). Its breadth of knowledge is impressive, and I think its ambition is inspiring.

For just over three decades, Gallup has been asking Americans if they feel better or worse off financially than a year ago. This month's number—55 percent saying they're worse off—is both a record high and the first time a majority said they're worse off.

An underreported finding from last Friday's jobs data is that people are increasingly being forced to take part time jobs. The numbers here already exceed their highest levels in the last recession. This chart, from a newly updated CLASP report on how the downturn is affecting low-income folks, shows what's going on.

See this NYT article for more on the people behind the numbers.

Few states have shed as many middle-wage jobs as North Carolina in recent years. So, now that the Tar Heel State has become a battleground in the presidential primary contest between Sens. Hilary Clinton and Barack Obama, the candidates have decided to channel their inner populists.

In appearances from the mountains to the coast, both candidates have talked about standing up to special interests, battling rapacious oil companies, supporting fair trade, valuing workforce training and bringing jobs to distressed rural areas. Yet no matter how passionately or skillfully they sound populist notes, neither candidate ever sounds quite on key. Why should, say, a dislocated textile or manufacturing worker in small struggling cities like Hickory or Rocky Mount trust what either candidate says? And for that matter, what are Obama and Clinton saying that is any different in substance or style from what Al Gore or John Kerry said when they were campaigning for president?

This is not to say that the economic positions of the Democratic are interchangeable with those of the Republican nominee, Sen. John McCain. Substantive differences exist and in many ways, Democratic ideas are rooted in a commitment in a shared prosperity. Yet when the candidates try to connect those ideas to the people and communities most adversely affected by economic change, they sound unconvincing and uninspiring. That disconnect constitutes perhaps the largest obstacle to the adoption of more inclusive economic policies on both the federal and state levels.

Good news in the NYT today about the Democrats' plans to push for extended unemployment insurance.

Job losses in the national economy combined with a surge in new claims for unemployment insurance are giving a boost to proposals — pushed for months by Democratic leaders and labor groups — to extend unemployment benefits beyond their usual limit of 26 weeks.

Bolstering the case for an extension, its advocates say, are indications that laid-off workers are having an especially tough time finding new jobs, even compared with past recessions.

Over the last year, more unemployed workers have exhausted their benefits before finding new jobs than in the years preceding the recessions of 1990 and 2001, according to a new analysis by a private research group, the National Employment Law Project, which will present its findings to Congress on Thursday.

In addition, the Committee on Ways and Means has a brief on the employment situation and the need for extended unemployment insurance. The Join Economic Committee has a similar report out, too. Both make the case, as CLASP's paper does, that the economy is so bad already that a relief package is necessary immediately.

Economic stimulation is all well and good, and all these proposals would probably have a strong stimulative effect. But that's now a secondary consideration. Relief policy no longer needs to be shoehorned into the narrow stimulus frame.

Shawn makes a really interesting point about how community and the economy are deeply interrelated that I'd like to build on. A key question here is what the public thinks about communitarian economics. Meg Bostrom's report on communicating low-wage work (good webinar here) found that some people care more about how the economy impacts communities than they do the economy alone, while others respond better to a message about the economy alone.

Bostrom tested three frames- stressing responsible economic planning, community planning, and sympathy for the poor. She found that, for example:

Importantly, less educated men and women respond differently to these frames. Less educated women respond to all three frames, but particularly to the Sympathy for the Poor frame. However, men without a college education only respond to the Economic Planning Frame. This suggests that advocates should communicate with less-educated voters using the Responsible Planning Frame, but add a morality-based appeal when speaking specifically with less-educated women.

Other subgroups responded to the sympathy for the poor frame and the community planning frame, but not the economy frame. And some only responded to the community and economy frames.

So for people who prioritize community, it might work to contrast "you're on your own" economics and individualism with the "we're all in this together" philosophy and interdependence. And to reach people who're more interested in the economy, Bostrom recommends a message about long-term responsible planning, which could be contrasted with a conservative approach that stresses short-term gains. Bostrom concluded that the economic planning message is the strongest and ought to be the lead, but that it would be even stronger if it was supported by the community planning frame.

So there may be no one right message, but rather multiple useful messages that probably ought to be combined or deployed separately according to the audience. Bostrom even found that the sympathy for the poor frame might be a good way to stir up support from the progressive base.

The folks who brought you "timely, targeted, and temporary" are at it again. On Friday, the Brookings Institution is hosting a panel on the mortgage crisis, and the Traveling (former) Treasury Secretaries, Citigroup's Robert Rubin and Prof. Larry Summers, are receiving top billing.

Whatever emerges might very well become the Democrat's response to the unfolding financial crisis. As is customary, nobody identified with the left wing of the progressive movement will be contributing. Panelists will probably offer watered-down proposals that excessively defer to free market theology and/or bail out everyone in Rubin's rolodex. Needless to say, I don't expect these folks to pull the economy out the ditch it's in, especially because they helped put us there in the first place.

So who will? Is there a comparable progressive event or set of proposals being planned? And am I missing something or have the centrists been way out front with solutions for our recession problem while progressives have been playing catch up? Perhaps I have unrealistic hopes that the Democrats would listen anyway, but it's at least worth a shot, and from where I'm sitting it doesn't seem like anybody is really trying.

In today's anti-Obama rant (now bi-weekly!), Paul Krugman makes exactly the wrong point about the economy:

This collapse in economic confidence has occurred even though the full economic effects of the implosion of the housing market and the freezing of the credit markets have yet to be felt. As more things fall apart, perceptions will only get worse.

All of this should work to the Democrats’ advantage. They can contrast the Clinton boom with the Bush bust; they can make the case that Republican economic ideology, with its fixation on privatization and deregulation, helped get us into this mess.

The problem is, the policies that contributed to the Clinton boom have almost nothing to do with what we need today. Krugman acknowledges that we're facing an economic crisis that's been precipitated by deregulation of the financial industry- but these are policies that President Clinton moved forward! Nostalgic appeals to the anti-government '90s won't build the rhetorical groundwork for a crisis-containing intervention.

This also happens to be the wrong message politically. To draw a real distinction between themselves and conservatives, a liberal/Democratic message would have to distance itself with its Clintonite past and make an affirmative committment to proactive intervention for everyone's benefit. You could probably find a more delicate phrasing of the idea, but the point is to craft a message that draws contrasts, defines the alternative negatively, and actually promotes the policies you're pushing.

One more thought on an economic message: another way to respond to conservative "economic royalism" is define conservatives as the divisive ones who favor the few at the expense of the many and liberalism as the inclusive alternative that envisions an economy for everyone. This is, I think, what FDR meant when he vowed to remove the moneychangers from the temple and all that, and Shawn's right that it was pretty successful rhetoric.

It just worries me that a liberal message that envisions a smaller "us" and a bigger "them" would backfire. It could trigger the false but prevalent perceptions of a progressive "us" that excludes the working class. That's the perception that Stan Greenberg's project found:

That the group most distressed about this changing economy is the group most hostile to the Democrats is a powerful statement about the character of progressive politics today. These voters feel increasingly marginal in this market economy, and Democrats -- and likely the labor movement as well -- barely know how to open their doors to them. However, it is hard to imagine a successful future for Democrats or the labor movement if they fail to build support with the working class electorate, broadly defined. In the absence of a strong initiative from the progressive side, many of these working class voters are sure to turn to a more conservative populist politics.

I'd also argue that even populist progressive messages can encourage people to turn away from government, because at root they're about the self-interest of a group and not the interests of the whole community. The work Demos has done on citizen and consumerist mindsets seems to caution against this approach, and so would the relative ease with which left-wing populism turns into right-wing populism, as it did for Reagan Democrats.

And I can see how the "hands-on manager" image is, well, boring, and I'd agree that competence isn't the most compelling virtue. But it's also important to address the feelings of helplessness and fear that John identified, and a message that stresses that something can be done about a crisis and that we're all in it toghether might serve that purpose. A chief goal here is to reassure the public that it's ok to make a change and take a risk in the middle of a crisis, and there's a general tendency to be risk-averse when times are tough. Rhetoric should attempt overcome these psychological obstacles in addition to the ideological ones.

Matt and John's previous posts got me looking back at two of the more helpful resources I've come across on the topic of economic narratives, David Kusnet's Talking Past Each Other: What Everyday American's Really Think (and Elites Don't Get) About the Economy and Stan Greenberg's write-up of focus group results from the 1995 Economy Project.

This advice, from the chapter on "How to 'Speak American' When You're Talking About Economics" in Kusnet's book, might help address the concern Matt raises about the potential divisiveness of narratives that characterize conservative economics in terms of self-dealing:

While Americans can accept inequalities in income and admire business people who succeed by offering high-quality products and services at affordable prices, they are angered when privileged and powerful people entrench their positions by bending or breaking the law. Americans understand fairness to mean that everyone in a competition must play by the same rules, not that there must be equality of results.

....

Because fair play is so important to Americans, two powerful ways to criticize corporate misconduct are 1) to attack politically connected corporate executives for “gaming the system,” and 2) to demand that there be “a level playing field” for everyday Americans who are up against powerful and politically connected corporations.

In general, I think Matt is on the right track when he uses terms like proactive and hands-on, collaborative management to describe the progressive approach to economic management. Continuing in this vein, a progressive approach could be described as one that focuses on long-term planning and making investments for the future, as opposed to a conservative approach that prioritizes short-term profits over long-term prosperity.

My one reservation is that some of this language can sound rather bland and uninspiring—a la the "competence, not ideology" theme of the 1988 Dukakis campaign. Call me hopelessly nostalgic if you will, but at times I wish we had political candidates who said things like this:

For out of this modern civilization economic royalists carved new dynasties. New kingdoms were built upon concentration of control over material things. Through new uses of corporations, banks and securities, new machinery of industry and agriculture, of labor and capital - all undreamed of by the Fathers - the whole structure of modern life was impressed into this royal service.

There was no place among this royalty for our many thousands of small-businessmen and merchants who sought to make a worthy use of the American system of initiative and profit. They were no more free than the worker or the farmer. Even honest and progressive-minded men of wealth, aware of their obligation to their generation, could never know just where they fitted into this dynastic scheme of things.

It was natural and perhaps human that the privileged princes of these new economic dynasties, thirsting for power, reached out for control over government itself. They created a new despotism and wrapped it in the robes of legal sanction. In its service new mercenaries sought to regiment the people, their labor, and their property. And as a result the average man once more confronts the problem that faced the Minute Man.

The hours men and women worked, the wages they received, the conditions of their labor - these had passed beyond the control of the people, and were imposed by this new industrial dictatorship. The savings of the average family, the capital of the small-businessmen, the investments set aside for old age - other people's money - these were tools which the new economic royalty used to dig itself in.

....

For too many of us the political equality we once had won was meaningless in the face of economic inequality. A small group had concentrated into their own hands an almost complete control over other people's property, other people's money, other people's labor - other people's lives. For too many of us life was no longer free; liberty no longer real; men could no longer follow the pursuit of happiness.

Against economic tyranny such as this, the American citizen could appeal only to the organized power of government.

....

Today we stand committed to the proposition that freedom is no half-and-half affair. If the average citizen is guaranteed equal opportunity in the polling place, he must have equal opportunity in the market place.

These economic royalists complain that we seek to overthrow the institutions of America. What they really complain of is that we seek to take away their power. Our allegiance to American institutions requires the overthrow of this kind of power. ....

After giving that speech at the Democratic National Convention in 1936, FDR went on to win in a landslide over Alf Landon (a landslide, it's worth adding, bigger than those of Reagan over Mondale and Nixon over McGovern). Among the legislation enacted during his second term: the Fair Labor Standards Act of 1938 (the first federal minimum wage law) and the Housing Act of 1937, the precursor of today's system of rental assistance for low-income families.

Shawn's point about who's benefitting is a good one. My only concern is that it appears somewhat divisive and may encourage individualistic thinking if it isn't placed in the proper context. So the economy needs to be at the center of a case againt pro-business and pro-rich people policies, and I agree that you'd have to include this point in a progressive message.

Still, on many of the issues facing the economy today, the main differences between conservatives and progressives are whether they would act or not, and whether they would have us act together or on our own.

Progressives have a proactive and collective answer for speculative bubbles and bad lending practices. Progressives have a proactive and collective answer for long-term underconsumption. Conservatives say we should just let the market ride, or give everyone a tax cut.

Describing government as a hands-on, collaborative manager is just one of many possible ways to relate the important differences between liberals and conservatives. Perhaps a way of addressing Shawn's point is to include "fair" in there, too.

And John's post sets out well the obstacles that a progressive message will have to grapple with, the most important of which, from the perspective of someone tuned in to the national debate, are fears and doubts about government. This op-ed from yesterday's Washington Post makes some interesting points about how FDR addressed similar concerns:

FDR defeated Hoover in 1932 without advocating a real break from his predecessor's policies. In fact, the Democratic platform that year actually called for "an immediate and drastic reduction of governmental expenditures" by 25 percent. But Roosevelt was a master at conveying hope and confidence. Although the millions of Americans who were jobless, homeless and hungry had a good deal more to fear than fear itself, his first inaugural address began to knit a close bond between the public and its president.

FDR's warm, avuncular tone in subsequent performances -- both formal speeches and his "fireside chats" -- convinced Americans that such programs as the WPA and Social Security were acts of common decency instead of steps toward socialism, as his critics on the right described them.

Matt rightly notes—and the recent stimulus debate supports his observation—that the progressive economic narrative needs work. I'm skeptical, however, that characterizing the progressive approach as hands-on and the conservative approach as hands-off will do the trick. As Dean Baker persuasively argues in The Conservative Nanny State, both progressives and conservatives are hands-on when it comes to the economy. The real difference involves who they want to give a hand to—progressives want to help ordinary people and promote an economy that works for all Americans, while conservatives are focused on regressive redistribution.

Political debates in the United States are routinely framed as a battle between conservatives who favor market outcomes, whatever they may be, against liberals who prefer government intervention to ensure that families have decent standards-of-living. This description of the two poles is inaccurate; both conservatives and liberals want government intervention. The difference between them is the goal of government intervention, and the fact that conservatives are smart enough to conceal their dependence on the government.

Conservatives want to use the government to distribute income upward to higher paid workers, business owners, and investors. They support the establishment of rules and structures that have this effect. First and foremost, conservatives support nanny state policies that have the effect of increasing the supply of less-skilled workers (thereby lowering their wages), while at the same time restricting the supply of more highly educated professional employees (thereby raising their wages).

This isn't inconsistent with the Wellstone/Bernstein "You're on Your Own" framing of conservative economics. Even though conservatives favor an interventionist approach, they're not all that interested in intervening on behalf of you.

I've been looking around for some research on how to frame a progressive approach to economic management. Places like the Rockridge Institute, the Frameworks Institute, and the Demos Center for the Public Sector seem to focus more on social policy and government. Does anyone out there know if the academic literature has anything to offer on the economy?

The reason I ask is that I'm pretty unsatisfied with what progressives have offered up so far. So in the absence of a rigorously tested model, it's worth speculating about what a good narrative would look like. Here's one suggestion (borrowing from the work of EPI's Jared Bernstein on YOYO and WITT economics):

The conservative approach to the econcomy is to ensure that everybody looks out for themselves. Government takes a hands-off management approach, because if you leave people alone, things will work out. When government becomes a "busybody" and gets involved in things it doesn't understand, it mostly messes them up. So the thinking goes.

A progressive approach stresses cooperation and the need for government, business and workers to work together. Government takes a hands-on approach to managing the economy. It wouldn't necessarily micromanage it, but it would help set investment priorities, guide exchanges, and intervene when things are getting out of control. Because when we let everybody look out for themselves, sometimes we get greedy and do reckless and ultimately self-destructive things, like when banks make mortgage loans to people they know can't afford them, or when companies like Enron lie about how much they're worth.

Right now, it seems like we're losing control of the economy. Despite this, the conservative model of "hands-off" management instructs us not to interfere- that there's little we can do together to solve the problems in finance, housing and consumption. The progressive alternative should assert that we have problems now because we didn't interfere before. We looked the other way for too long, and now we're paying the price. The right message should provide hope that we won't repeat the mistakes of the past and that this time we can and will do something before it's too late.

As John Edwards left the race to be our next President, he reported that both Hillary Clinton and Barack Obama had “…pledged to me and more importantly through me to America, that they will make ending poverty central to their campaign for the presidency.”

Here’s hoping Clinton and Obama intend to do more than establish a limited and limiting goal of cutting poverty. And that neither makes a promise to adopt the flawed “cut poverty” goal in order to extract his endorsement.

It was never clear why Edwards made establishing a national goal to cut poverty a feature of his campaign.

After all, Edwards often talked about workers whose household incomes exceed the official definition of poverty. And he was definitely focused on promoting policy solutions to systemic problems in the labor market and our economy. This makes sense, if our goal is a stronger economy and inclusive democracy.

Unfortunately, Edwards got in the way of his own message by putting up the poverty banner.

There are two problems with the goal to end poverty. First – it’s very limited. Moving people above the poverty line won’t do much to strengthen our economy, communities, or families because it was designed to establish the income necessary to avoid material deprivation, nothing more. Moreover, the formula is seriously out of date because it was developed using 1950s household expenditure data. At that time, families spent more on food and much less on housing, transportation, and child care. Yet, the formula—based on the percentage spent buying enough food to survive-- has never been updated.

Using the poverty measure to judge our success also opens the door to conservative critics who will promote marriage and “hard work” as the solutions to poverty – effectively ignoring systemic causes of income inequality like stagnant wages and declining employment benefits, and other societal shifts that are barriers to economic and social mobility.

Second, merely changing the definition of poverty to fit these policies won't work. It really doesn’t matter who or what the proposal serves. When we target the poor, too many people think they know who that is: those people who made bad choices in life by dropping out of school, or getting pregnant at a young age without benefit of a supportive, stable partner. Even the so-called "working poor" are suspect, because Americans believe that if you work hard, you will do well. So, by that definition – people who are working hard won’t be poor. And it doesn’t seem to matter how many research reports we throw at the issue – we haven’t been able to build the necessary public support or political will for the policy solutions we want.

All of which suggests, we need a new way to talk about our goal. Poverty is too limited (by U.S. definition) and limiting (by U.S. public understanding) a notion and opens the door to opposing arguments in a big way.

Defining the problem as “poverty” sets up a losing scenario for policymaking. My crystal ball predicts competing proposals in any Congressional debate over the best way to cut poverty in half:

1) The Law to Halve Poverty Over Ten Years with good schools, universal pre-k, financial education, health coverage for all, expanded child care, increased minimum wage, unions; and
2) Making Poverty History Act with marriage and work.

Conservatives would demolish a comprehensive proposal because it goes far beyond the stated goal of raising income above the poverty line (about $20,000 for a family of 4) and the public won’t support such spending proposals because they believe people are poor due to personal failures.

This debate would feel frustratingly familiar to anyone who followed the evolution of welfare legislation in the last decade.

It is time to move beyond the fight over issues of poverty and “personal responsibility” and reset the goal as one of economic mobility and social inclusion. We shouldn’t blow this opportunity by sticking to an old – and failed – framework for this debate. The candidates will benefit greatly from developing an alternative lens on the issue, one designed to build support for broader policy solutions, in addition to the many good ideas that we haven't yet created political will to enact.

Back when I was working on state-level policy in Ohio, and Ted Strickland was a newish member of Congress, he spoke to a group of Cincinnati progressives (no, it’s really not an oxymoron) interested in policy issues that I helped to found. I wouldn’t have said he was “stimulating” exactly – but definitely smart and thoughtful about social issues. (Plus, he was one of the speakers who went out with us after the event – our favorite kind of presenter.)

Now that he’s governor, Strickland has been taking some innovative steps to strengthen the economy.

For example, he’s implementing a policy idea that surfaced in our national scan, New Ideas and Strategies for Better Jobs: creating democratic workplaces with state level policy. These policies address the system of leadership and decision-making within workplaces, particularly in employment sectors that have traditionally been excluded from activities such as collectively negotiating better working conditions.

Last summer, Governor Strickland gave home health care workers the opportunity to organize and negotiate over work conditions. Last week, he extended this option to about 8,000 home-based child care workers.