Debt and taxes

It is absurd on its face to suggest that pro-debtor populism and egalitarian social democracy are necessarily opposed, irrespective of any historical correlation. Perhaps we should look to their historical inability to unify as a possible reason for the failure of the left in America (beyond simply accepting the undemocratic nature of the American political system, as recently reaffirmed by Case-Deaton). Had the DNC not sabotaged Bernie’s shot at the presidency, we would have heard a lot more about making college universally available. But what of those who had taken on that debt already? With student loan debt long since having eclipsed credit card and auto loan debt in the US, the natural next step would have been to offer a debt jubilee to those bearing that $1.3 trillion in loans, whether or not that was part of the platform. Even neoliberal Obama allowed write-offs of loans made to finance higher ed at fraudulent for-profit colleges. A progressive President with a mandate to set the national agenda could have easily built on that flimsy precedent, and even if Sanders himself had not been the one to do it, his election would have certainly indicated the end of the Reagan regime, allowing an “articulative” President to follow (to adopt the framing of fellow CTer Corey Robin) to finish the job. This is but one example, with every reason to believe that taxes on the rich and spending on social programs would have increased concurrently.

But in the spirit of WJB, and since you brought him up, let’s talk about another change in the American system which undermines your pretense: namely, the fundamental change in the US monetary system following Nixon’s conversion of the dollar to a fiat system. While that has since been used primarily to compensate for our Presidents’ insufficient penis sizes by buying toys to kill brown people, as well as pumping as much of the commons into the oligarchs’ pockets as possible through other means, Modern Monetary Theory demonstrates that, under this fiat system, so long as we have the resources to do so, we need not concern ourselves with national debts or deficits, and if we want to rapidly eliminate the radical inequality which defines us now, we have every means to accomplish this from both the pro-debtor and social democratic sides of the tails-the-poor-win/heads-the-rich-lose leftist coin. Taking into account this total transformation in the nature of the monetary system voids any historical comparison pre-1971, thereby making this necessary reunification of the populist/social democratic left all the more possible.

Isn’t inflation a pro-debtor policy and isn’t that positively correlated with Social Democracy?

Is it useful to distinguish relief on the stock of debt from relief on the flow of related interest payments, and consider the latter as well? A curious feature of US political debate is that no one in politics (and this includes the Tea Party so far as I am aware) seems to question the principle of tax relief on mortgage interest payments on owner-occuped residences. There is occasional reference to capping the amount of relief, but even this seems to get little traction.

In contrast, over the decades I have lived in the UK, such tax relief policy has been altered on a number of occasions by both Conservatives and Labour, before finally being eliminated by then-Chancellor of the Exchequer Gordon Brown in 1999/2000. Brown regarded it as a “middle-class perk”. In the US context, where mortgage interest relief appears to apply to any owner-occupied home, no matter how valuable, it would be even more of a bonus for the really wealthy.

It is not clear to me how MMT addresses money creation by private hands. At first glance, it doesn’t seem to be of much relevance to the real world.

But thinking of banking and populism brings to mind Thomas Jefferson and Andrew Jackson and what I suppose you must call the Unamerican System, in opposition to the American System. In this vision the national government essentially functioned as an engine of land redistribution, selling Native American lands to speculators for high prices that could substitute as much as possible for taxes on the property and consumption of settlers. The lands would serve as a kind of non-revolutionary assignat. What was for the settlers was free collateral provided cheap credit. Soft money would foster economic growth by promoting small farms. And moral virtue too, small farmers being the salt of the earth. In practice I think this promoted land speculation and financial instability. But this was in the long run apt to the interests of many, particularly plantation owners, like Jefferson, or would be plantation owners, like Jackson. As for virtue, slave patrols and militias killing Indians promote a kind of solidarity among certain segments of the population. It appears to me this still passes for a kind of virtue in many eyes.

As for the lack of a left in the US, it still seems to me that repression, by violence and other forms of repression played a much over-looked part at all times. Trump recently blathered about Andrew Jackson preventing the Civil War. The popular media of course avoided the common sense observation that he may have been thinking of Jackson’s threats in the Nullification Crisis. It is of course also the case that Jackson’s connivance in the censorship of abolitionist literature in the US mails promoted disunion by giving special privileges to the southern planters. This kind of repression played a major part in promoting illusions about the relative popularity of slavery and abolition.

In contemporary times, the difference between populism and any kind of leftism I think, is that populism holds that “we” are over-taxed, and growth and freedom (defined as disposable income, of course,) depend on lowering taxes. I believe “we” are underpaid, not overtaxed. But as near as I can tell there are no reputable economists who believe this.

Should have given it more thought, and taken the latest Thomas Frank and his analysis of decayed social democracies as professional class regimes into consideration.

Anti-populist regimes might be considered rentier economies, rentiers including not only landowners and professionals, but artists, entertainers, athletes, academics.

His racial politics aside, I’m not sure I see what distinguishes William Jennings Bryan from New Deal Liberals.

US Rural Protestant voters have always loved transfers — TVA, military bases, SS, Medicare, agricultural transfers and price supports and you name it. Those states always got back $1.20 in transfers for every $1.00 they contributed in taxes. Republican neoliberalism gave them the race stuff but started taking away their incomes and threatened their transfers, hence Trump (who of course lied but paid lip service to their economic concerns.) Of course, the other unifying issue was abortion. To those not in the know, Southern Baptists were pro-abortion until the 1970s. Look it up as they say. So now there were two issues — race and abortion — that the Republicans successfully used as a wedge to divide the common economic interests of the economic progressives and populists.

What do all these folks pine for? FDR and Eisenhower, the later who would be considered a mainstream Democrat today. Take away race and abortion issues and you get 60% of the vote. But you can’t put the toothpaste back in the tube.

As an aside, the sexism issue is will go away over time as women gain economic power. The analogy I would make is the assimilation of Jews and Catholics in the 30s when they became “white.” Look at the way Trump treats Ivanka. Even the pigs don’t want their daughters the way they treat women.

“Look at the way Trump treats Ivanka. Even the pigs don’t want their daughters the way they treat women.”

cf USA today interview, Aug 1 2016:

‘What if someone had treated Ivanka in the way Ailes allegedly behaved?

His reply was startling, even by Trumpian standards. “I would like to think she would find another career or find another company if that was the case,” he said.’

mdc – Yep. With fewer children, and women entering the workforce, the oligarchs see their daughters as successors, not their son-in-law as back in the day. And the 1% and those below the oligarchs see their daughters as future professionals. The women thing is slowly turning into a class thing as it did with other groups (Irish, Italians, Jews) that came to be seen as “white.” And so it goes. Sheryl Sandberg had no problem crossing a picket line of Hispanic housekeepers to talk about “leaning in.” https://www.thenation.com/article/housekeepers-versus-harvard-feminism-for-the-age-of-trump/

@3
(i) Although its self-presentation was as a popular movement, its members were mostly hardcore Republican activists

This seems a remarkable claim to make without a single piece of supporting evidence. What distinguished the 2010 tea party from hardcore Republican activists is that of its members were independents with no position on cultural issues (see your ii below) and Democrats.

http://www.gallup.com/poll/127181/Tea-Partiers-Fairly-Mainstream-Demographics.aspx?utm_source=alert&utm_medium=email&utm_campaign=syndication&utm_content=morelink&utm_term=Politics

Rep: 49
Ind: 43
Dem: 8

(ii) Initially, its focus was entirely on economic policy, opposing both debt relief and redistributive taxation, with no position on culture war issues like immigration

The 2010 Tea Party was about everyone playing by the rules – banksters in jail, not bailed out. Ditto for everyday folks who bought too much house. That extended (easily) into pro-immigration/anti-illegal immigration positions.
http://www.nytimes.com/interactive/2010/04/14/us/politics/20100414-tea-party-poll-graphic.html?_r=0
The 2010 Tea Party members were better educated and more affluent (but not rich) than average Americans. The NYT poll offers a different distribution GOP/Independent/Dem, but not by much. What is clear is that the Tea Party was white, conservative and somewhat religious, but certainly not ‘mostly hardcore Republican activists.’

The Omaha Platform adopted at the foundation of the People’s Party (or Populists) included both free and unlimited coinage of silver and a graduated income tax. William Jennings Bryan personally was an advocate of income taxes, including in Congress and in the ‘Cross of Gold’ speech.

Thanks for putting 20 and 21 up, John. To expand, and on the question of populism – ways to resist and other popular topics. What the NYT-Times and Gallup poll confirms is that the Tea Party membership was angry with the status quo and, in the process, helped revitalize the zombie corpse of the GOP.

Nobody in 2009 predicted that George Bush’s GOP would demolish the Democrats in the 2010 midterms.

The Tea Party must be destroyed worked for both establishment Democrats and the GOP establishment. Koch Konspiracy tales and cherry-picked Birther stories populated all media outlets, for the most part, as the GOP set up its own ‘Tea Party Brand’ to compete with and co-opt tea party activism. Lois Lerner forced local tea party groups fill out out endless reams of paper and, as noted above, because the original tea party was all about obeying the rules – that part of the party was effectively sidelined to the immense satisfaction of both the GOP and Democratic establishments. The CT community is a good case in point. I remember clearly my disappointment and surprise at discovering that many here regarded Glenn Reynolds as an advocate of increased police powers and an authoritarian state. The CT community, as an example of good leftists, fixated on telling and re-telling stories of the ‘incredible stupidity’ and ‘racism’ of tea party supporters, much to the satisfaction of the Clinton wing of the Democratic party. Daily Kos and other sites that previously protested America’s military adventurism became boot-licking apologists for the Obama/Clinton wars.

2010 represented a rare opportunity for grass-roots leftists to form common cause with a motivated anti-elite movement dedicated, as JQ notes, almost exclusively to economic, rather than cultural issues. The Tea Party wanted the banksters in jail and were doing more to protest cash handouts to Wall St. than any on the left. Most on the left were smugly sneering at the caricatures and straw men propagated by TPM, Media Matters, and other faux grassroots meme machines. Most of the tea party members, like most Trump supporters, want social security, good healthcare, and good education and were at least open to working hand-in-hand with anyone willing to take on Wall St.

The ‘left’ supported big pharma, big insurance, Wall St. and the continuation of America’s military adventures in 2010. Then and now leftists privilege culture over economic necessity. Trump and Bernie supporters are angry and frustrated that in the current climate Wall St. always wins. That’s no accident. Both the GOP and Dem establishment know that cultural issues force average voters to divide their energy as effectively as the divisions in France in 1788. The three orders vote separately according to their cultural status, and in the process never achieve the power to change anything.

No perfect leader is coming over the horizon. I hoped Bernie would carry the day, he didn’t. So, I and others ready to turn the tilted playing field upside down are left with the vulgarian bumpkin. I’ll take him, or any other populist, everyday, flaws and all, rather than any candidate of the establishment of either party.

@3 “MMT doesn’t mean what you think it means”

John – your linked piece seems to argue that it is wrong / damaging to maintain that a monetarily sovereign govt “does not need taxation to finance public expenditure”. But Shane was not maintaining that no taxation is required. He was effectively just espousing the (fairly standard) MMT tenet that the constraints on public expenditure are real, not financial.

Separately, whilst you make a good case that in practice pro-debtor policies appear inversely correlated with pro-redistributive policies, I wasn’t clear from your post why any given party would necessarily need to make a choice between the two.

kidneystones:

“What distinguished the 2010 tea party from hardcore Republican activists is that of its members were independents with no position on cultural issues (see your ii below) and Democrats.

Rep: 49
Ind: 43
Dem: 8”

Strangely, the very next set of numbers in your link are these:

Conservative: 70
Moderate: 22
Liveral: 8

Given that 70 of Tea Party members described themselves as conservative, I’m wondering where you came up with “…no position on cultural issues…”

John Quiggin @7
re AfD domestic policy.
Does UKIP have a domestic policy?

@19 I’m not sure what it means to say that the US has the most pro-debtor bankruptcy regime in the world, apart from credit card debt (and student loans). How many bankrupt people don’t have credit card debt?

In any case, going by what I’ve read in the press, it certainly doesn’t have the most pro-debtor foreclosure regime.

Wrt income taxes, I quote a Thomas Piketty paper from 2006, the second link I found to a Google search for “piketty us uk tax regimes”.

“France had less progressive taxes than the US or UK in 1970 but has experienced an increase in tax progressivity and has now a more progressive tax system than the US or the UK”.