The National Debt: A Guide for the Perplexed (and Alarmed)

Since coming back to the US, I have been surprised how often the national debt comes up in conversations about most any political topic.  In discussions about inequality, for instance, I hear that we can hardly trust the government to address inequality given its own financial incompetence, and that if there is financial injustice about, surely the greatest injustice is the government’s systematic stealing from our children and grandchildren, whom we are saddling with an intolerable burden of debt.  The theme of the travesty and looming catastrophe of US government debt has fueled the rise of the Tea Party, and played a role in the ridiculous fiscal standoffs in Congress over the past couple years.  Of course, it is an important fiscal concern that both parties should be attentive to, but this is not usually how one hears it discussed—i.e., in the context of particular policies for fiscal responsibility.  Rather, it is used as a universal putdown—a way of claiming, no matter what the particular point is under discussion, that the government cannot be trusted because its debt is both irresponsible and immoral, and that only a radical overhaul (one might almost say “overthrow” from some of the rhetoric) of our government can save us from imminent disaster.

As someone who used to be something of a national debt alarmist myself, I thought it might be helpful to put the issue in the proper context.  The following is an expanded form of a little explanation I gave to a friend on the question after a political discussion last week.

1) Use real numbers
For one thing, inflation is generally ignored.  All you have to do is yell out $16 trillion—an obviously immense sum—and point proven, right?  “Over the last forty years, the debt has risen from $500 billion to $16 trillion—our debt is spiraling out of control.”  Adjust for inflation, though, and it’s only risen from $2.4 trillion to $16.8 trillion.  Obviously, however, that’s still a pretty substantial increase.  That’s why it’s important to: Read More

Piketty Notes and Quotes, 5: Inequality Language Games

Here’s another post on Piketty that isn’t really about Piketty per se, but about the sorts of conversations one finds oneself in when talking about him.  Over the past week and a half, I have been struck by a curious tendency I have encountered in a number of Christians when the subject of inequality comes up.

“So are you saying inequality is a problem, inequality is bad?”

“Well, yeah, I do think that, at least beyond a certain point, it’s a problem.”

“So why is it bad?”

“Well, it tends to create all these negative consequences, you see: social unrest, unhealthy concentrations of political power, oppression, etc.”

“So the problem then isn’t inequality, but people being envious, or people being power-hungry and corrupt, or people being oppressive, right?”

“Well, yeah, but high inequality tends to create those problems.  What’s your point?”

“Ah, but see you’re admitting now that inequality is not bad in itself.  It’s people who are bad, and these sins are just as much sins whether or not I have the same as you or a million times as much as you.”

“Um . . . ok.  But my point is that inequality is still a problem for our society.”

“But you’ve just admitted that inequality in itself isn’t the problem.”

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Rigged to Win

Since Christmas, I’ve been working my way slowly through George Packer’s masterpiece The Unwinding, which chronicles the slow decay of American society and politics over the past generation in poignant prose that follows the struggles and triumphs of a handful of more-or-less-ordinary citizens, using them to illuminate the story of a nation.  It climaxes with the events following the 2008 financial crisis, which revealed how thoroughly corporate money and power had taken the American political process captive.  This passage was particularly eye-opening:

“The previous October, in the last month of the [Obama] campaign, Connaughton had picked up signs from [Delaware senator] Kaufman that the Obama team wanted to bring Robert Rubin on as Treasury secretary.  ‘Don’t you realize that half the country wants to hang Bob Rubin?’ Connaughton asked when Kaufman expressed enthusiasm at the prospect.  Kaufman would later say, ‘It was like a car had broken down and we needed a mechanic.’  Obama, inexperienced in government and a novice in finance, seemed to believe that Rubin and his followers were the only competent repairmen available.

No more proof was needed that the establishment . . . would emerge from the disaster in fine shape.  The establishment could fail and fail and still survive, even thrive.  It was rigged to win, like a casino, and once you were on the inside, you had to do something dramatic to lose your standing. . . . Rubin was no longer viable for Treasury, but his people were practically the only candidates under consideration by Obama, who, after all, had fought his way into the establishment from farther back than any of them.  Michael Froman, Rubin’s chief of staff under Clinton, later a managing director at Citigroup, introduced Rubin to Obama, and he continued working at the bank while serving on Obama’s transition as personnel director, then collected a $2.25 million bonus before joining the administration.  Jacob Lew, another Citigroup executive, became deputy secretary of state with a $900,000 bonus in his pocket.  Mark Patterson, a Goldman Sachs lobbyist, was hired as chief of staff at Treasury despite the lobbying ban.  Timothy Geithner, a Rubin protégé and the architect of the bailouts, was appointed Treasury secretary and survived the revelation that he had flagrantly underpaid taxes to the agency he was going to lead.  Larry Summers, whose meaty fingerprints were all over the pro-bank policies of the late nineties, and who earned millions in speaking fees from various future bailout recipients, became the leading economic adviser at the Obama White House.  Even Rahm Emanuel, Obama’s chief of staff, a career public servant, had made a cool $16.5 million at a Chicago investment bank in the thirty months he spent between government jobs.  All at the top of their field, all brilliant and educated to within an inch of their lives, all Democrats, all implicated in an epic failure—now hired to sort out the ruins.  How could they not see things the way of the bankers with whom they’d studied and worked and ate and drunk and gotten rich?  Social promotion and conflict of interest were built into the soul of the meritocracy.  The Blob was unkillable.”

Working for All You’re Worth: Some More Thoughts on the Minimum Wage Debate

A few weeks ago, I wrote a brief reflection on the recent debates over the minimum wage for Capital Commentary.  My purpose there, and in the several conversations I’ve had in social media on this question, was not really to advocate for or against raising the minimum wage; in my view, the economic and political complexities of the issue are such that I’m inclined to be suspicious of anyone who’s confident they know the right answer to the question.  My main concern is to call out really bad arguments against the minimum wage, particularly those peddled by Christians.  There may well be a good case to make against the minimum wage, but it seems awfully hard to find people making it sometimes.

So I want to reflect a bit more fully on what’s wrong with one of the common conservative arguments against the minimum wage: that the laborer is only worth his productivity.  The argument goes something like this: Sure, it sounds wonderful to pay people a living wage, but a worker’s job is to contribute productivity to a business, adding value by his labor, and ultimately, the business cannot afford to pay him any more than what he brings in.  If a McDonald’s worker can only contribute an average of $6 profit per hour to the company by his labor, then McDonald’s will go broke pretty quick paying him $10/hr.  Accordingly, raising the minimum wage will simply increase unemployment, and instead, therefore, we should focus on raising worker productivity.  So Acton’s Joe Carter says,

“Instead, we should focus on faster economic growth and improving productivity of low-skilled workers. By increasing the value of a worker’s labor, we make it possible for them not only to feed their family but also to help fulfill the needs and desires of their neighbors….The goal should not be to merely give people a living wage but to help them gain the ability to make a life for themselves based on the value of their labor. What the working poor need most is marketable skills and productive jobs, not more handouts disguised as ‘wages.'”   

Now, arguments like this have a weaker, pragmatic form, and a stronger, moral form.  The moral version, favored by doctrinaire free marketeers, argues that a laborer ought not to be paid more than his productivity, which marks the just price of his labor—as someone put it to me in a Facebook discussion, “if you can’t find somebody who values your labor at $X/hr., then you have no right to employment.”  The pragmatic version would be: “It’s a cold hard world out there, and the fact is that the only way you’re going to get McDonald’s to employ people at $10/hr. is by making their labor worth $10/hr.”    There are problems with both versions, but I will begin by tackling the moral problem.

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The Fashionable Outcry of Each Generation

Continuing my series on C.S. Lewis’s Screwtape Letters:

“….The use of Fashions in thought is to distract the attention of men from their real dangers.  We direct the fashionable outcry of each generation against those vices of which it is least in danger and fix its approval on the virtue nearest to that vice which we are trying to make endemic.  The game is to have them all running about with fire extinguishers whenever there is a flood, and all crowding to that side of the boat which is already nearly gunwale under.  Thus we make it fashionable to expose the dangers of enthusiasm at the very moment when they are all really becoming worldly and lukewarm; a century later, when we are really making them all Byronic and drunk with emotion, the fashionable outcry is directed against the dangers of the mere ‘understanding’.  Cruel ages are put on their guard against Sentimentality, feckless and idle ones against Respectability, lecherous ones against Puritanism; and whenever all men are really hastening to be slaves or tyrants we make Liberalism the prime bogey.
But the greatest triumph of all is to elevate this horror of the Same Old Thing into a philosophy so that nonsense in the intellect may reinforce corruption in the will.  It is here that the general Evolutionary or Historical character of modern European thought (partly our work) comes in so useful.  The Enemy loves platitudes.  Of a proposed course of action He wants men, so far as I can see, to ask very simple questions: is it righteous? is it prudent? is it possible?  Now if we can keep men asking ‘Is it in accordance with the general movement of our time?  Is it progressive or reactionary?  Is this the way that History is going?’ they will neglect the relevant questions.  And the questions they do ask are, of course, unanswerable; for they do not know the future, and what the future will be depends very largely on just those choices which they now invoke the future to help them to make.  As a result, while their minds are buzzing in this vacuum, we have the better chance to slip in and bend them to the action we have decided on.  And great work has already been done.  Once they knew that some changes were for the better, and others for the worse, and others again indifferent.  We have largely removed this knowledge.  For the descriptive adjective ‘unchanged’ we have substituted the emotional adjective ‘stagnant.’  We have trained them to think of the Future as a promised land which favored heroes attain—not as something which everyone reaches at the rate of sixty minutes an hour, whatever he does, whoever he is.” —C.S. Lewis, Screwtape Letter #25

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