How to listen to HRC’s big economics speech tomorrow

July 12th, 2015 at 12:01 pm

Ariel[about Leopold] He taught me a lot…
Andrew: Like what?
Ariel: Like how to listen to Mozart.
Andrew: With your ears, right?

–from Woody Allen’s “A Midsummer Night’s Sex Comedy”

Hillary Clinton is poised to give an important speech tomorrow (Monday) explaining her diagnosis and prescriptions on the U.S. economy, with a focus on wage stagnation and the persistent gap between overall growth and the prosperity of low- and middle-income families.

Their staff briefed a bunch of us DC types, and I can confidently assert that this is a speech worthy of your attention. The argument is organized around the principle that sustainable growth is essential but there’s no reason to expect it reach the middle class. She then articulates what I would call a reconnection agenda—a policy architecture designed to reconnect growth and more broadly shared prosperity—which focuses on:

–reducing labor-force-entry barriers for women by expanding child care and paid leave;
–investment in physical and human capital as well as clean energy;
–updated labor standards, including OT and minimum wages;
–ideas to incent more patient capital, fewer share buybacks, less short-termism in investment;
–more profit sharing.

All good, mostly familiar ideas, though the last two bullets are welcome additions to the usual fare in this space. And I particularly like the contrast between growth alone and growth + reconnection policies. Too often, the diagnosis I hear from politicians on the right is that sure, there’s too much inequality in the economy, and that’s why we need faster growth. That, of course, assumes away the very core of the inequality problem. As productivity growth continues to diverge from median and low pay, why should we believe that the answer is simply more productivity growth?

In fact, such growth is necessary, but in our era of such heightened inequality, it is far from sufficient.

But that’s actually not what I’m here to talk about this lovely morning, as I contemplate all this on my back porch next to a snoozing fat, black cat. I’m here to examine, if not pre-empt, some of the analysis that I expect to follow the speech.

Basically, the tendency of many of us paying attention to these policy matters right now is to scrutinize the details of these types of ideas, and to do so in the context of today’s political realities. Will they work? How could she (or Bernie, for that matter) get them past a hostile Congress? What are the “payfors”? Does the agenda differ sufficiently from Obama’s?

These are reasonable and important questions and I fault no one, myself included, for asking and trying to answer them. But I don’t think they are as fundamental as they might sound, and not just because it’s still early days.

Instead, there are two things that matter above all else. First, what is the candidate’s broad diagnosis and prescriptions, as discussed above. And second, will he or she, as president, join the fight with the necessary energy and conviction.

Once you get the first part right—diagnosis and policy prescriptions—your strategy regarding gridlocked politics or how your ideas are different than someone else’s may matter less to the electorate than your ability to convince the people you’re targeting—the middle class households for whom growth has heretofore been a spectator sport—that you’ve truly got their back.

It is less important to explain how you’d capitalize an infrastructure bank than why it’s so important to invest in the public sector, how critical it is to have an amply funded, functional federal government. Even more so, how you as president, will fight your a__ off on behalf of those who depend on full employment, quality public goods, the safety net, the breaking down of barriers to mobility that inequality has erected.

These days, I’m listening less for nuanced differences between your agenda and Obama’s, and more for the FDR spirit (paraphrasing): “I’ve got some ideas on how to close this glaring disconnect between middle-class prosperity and growth. Of course, I think they’ll work. But if they don’t, or if politics blocks them, I guarantee you that I’ll keep trying until the fortunes of the middle class are once again rising with the rest of the economy.”

“I know how hard this will be. I know well the depth of the resources of the powerful who will try to block me from pursuing this reconnection—I know how deeply they’re motivated to keep growth flowing exclusively their way. And I won’t stop fighting them until the balance of power, wealth, and paychecks is restored.”

I’m no pollster, but my gut tells me that this is what people need to hear in their ears and feel in their guts along with the details of your policy framework. The latter, by itself, like growth, is necessary but insufficient.

Update: read the deep, well-organized thoughts of Max Sawicky on all of the above; he’s less sanguine than I, though you have to jump higher to clear his bar than mine. And while he threatens my cat, through a proxy, his dog looks to sweet to do much damage.


Snoozing cat, thoroughly uninterested in all of the above.


Greece, Texas, and Manhattan

July 6th, 2015 at 10:49 am

PK correctly reminds me (as did a commenter) that in fact, Manhattan did bail out Texas. But my key point (really, the key point of the German economist who made this argument to me), as Paul notes is this:

But of course Manhattan was never asked to bail out Texas; we had a national system of deposit insurance [which the eurozone, of course, does not–JB], and the big Lone Star bailout was automatic.

Real sharks, creditors, and skewed Old Testament justice

July 6th, 2015 at 9:27 am

A quick note before I head to the beach to try to simultaneously relax and avoid being eaten by a shark. I apologize if my last missive for a few days is a touch on the depressing side.

I and others, e.g., Krugman, Stiglitz, Steve Waldman, have advocated for pragmatic solutions to the Greek debt crisis based on what I’ll self-servingly call balanced analysis. See Waldman, e.g., who, in the course of trenchant analysis, clearly does not let the Greeks off the hook, and is even potty-mouthed about it.

Our arguments come down to: let’s find a way out of this that requires Greece to implement needed reforms (i.e., continue to do so, since that process is already underway) that doesn’t needlessly and counter-productively punish the citizenry in ways that undermine the goals sought by both sides: debt reduction for the Troika, and growth and lower unemployment for the Greeks.

As I put in my piece from last night—link above—there’s a chance that the resounding “no” vote could move the debate from its current destructive equilibrium to a better one. But things could just as easily bounce the other way, toward more Old Testament “justice” (OTJ), and skewed justice as that, as reckless borrowers are punished but reckless lenders are exonerated.

Perusing the papers this AM, I see so much of this OTJ that I’m thinking I got it wrong. Check out the headlines over at

Why Greece’s no vote is really no vote at all
–Germany sees no reason to restart Greek talks
And the classic:
–After Germany’s no vote, let the punishment begin

These people don’t want pragmatic solutions. They seek neither analysis nor balance. They don’t want to hold all errant parties accountable. They want blood, OTJ, and the protection of creditors and the politically powerful at all costs.

In this regard, they’re not unlike the sharks I’ll be trying to avoid over the next few days, though that’s really unfair to the sharks, who are instinctual hunting and eating machines. These people are supposed to be humans, with the capacity to understand nuance and even, dare I add, ethics.

Like I said, sorry to be a downer, but at least for the next few days, I’ll throw in with the real sharks.

Until then, keep it real, stay cool, and don’t believe it until you read about here at On the Economy!

The Greek “no” vote and new developments

July 6th, 2015 at 8:16 am

Posted last night at Posteverything. As you’ll read, while the way forward is anything but clear, the strong rejection of austerity in the face of very high stakes struck me as a bold assertion of self-determination, evidence of a strong democratic impulse all the more impressive as it occurred as bullies threatened to mete out more economic pain.

And this AM, we awake to the resignation of the Greek finance minister, Yanis Varoufakis, who has been so instrumental in developments thus far. He’s getting out of the way in hopes that removing himself will facilitate the type of compromise I hope for in my piece linked above, but not without a parting shot.

From his resignation note, shades of FDR: “And I shall wear the creditors’ loathing with pride.”