Bill Keller's Center-Left Is the Reason We Are Growing Less Rapidly

Bill Keller gives us some holiday fun by getting almost everything completely wrong in contrasting the left-left (Elizabeth Warren and Bill de Blasio) with his friends, the center-left. There are so many profoundly ill-informed assertions that it might be hard to know where to begin if Keller didn't make it so easy. Keller tells readers:

"The center-left (I’m somewhat oversimplifying these categories) agrees on the menace of inequality, but places equal or greater emphasis on the fact that the economy is not growing the way it did for most of the last century. The sluggish growth means that not only are the poorest stuck at the bottom, but the broad middle is in economic decline."

The amazing part of the story is that Keller's center-left heroes are precisely the reason why the economy is not growing the way it did for most of the last century. Keller perhaps missed it, but it was the center-left that set the economy on a bubble driven growth path in the 1990s. The demand generated by the stock bubble was used to fill the hole created both by lower consumption spending due to the upward redistribution of income and the exploding trade deficit which resulted from Clinton's high dollar policy.

Keller's center-left friends also pushed financial deregulation so that their Wall Street friends could get ever richer at the expense of the rest of us. This deregulation facilitated the build-up of the housing bubble, the collapse of which gave us the current downturn from which we have still not recovered.

Given the origins of current weak growth in the policies of his center-left friends it is more than a bit bizarre that Keller would lecture the left-left about the need for stronger growth, as when he tells readers:

"The center-left — and that includes President Obama, most of the time — sees the problem and the solutions as more complicated."

Okay, that should be enough to get the gist of Keller's piece, now for some specifics. He outlines the left-left agenda:

"The left-left sees economic inequality as mainly a problem of distribution — the accumulation of vast wealth that never really trickles down from on high. Their prescription is to tax the 1 percent and close corporate loopholes, using the new revenues to subsidize the needs of the poor and middle class. They would string the safety net higher: expand Social Security, hold Medicare inviolate, extend unemployment insurance, protect food stamps, create more low-income housing. They would raise the minimum wage."

Actually the left-left very much wants to reduce the rents that both allow the rich to get so rich and also imply huge amounts of economic waste. This is a reason that so many on the left-left support a modest financial transactions tax like the one the United Kingdom has had on stock trades for more than three centuries. This would both reduce economic waste (most short-term transactions provide no economic benefit) and limit the fortunes generated in the financial sector.

Eliminating tax loopholes is also not just a matter of getting additional tax revenue, these loopholes also lead to massive rent-seeking. The main way that rich private equity fund managers like Mitt Romney become rich is by finding clever ways to game the tax code. Using heavy leverage, this sort of tax arbitrage can make a center-left funder very rich very quickly in ways that contribute nothing to the economy. If we believe that these private equity fund managers are actually highly intelligent highly motivated people who could potentially contribute much to the economy then it is an enormous waste to have their talents devoted to gaming the tax code. The center-left would know this if it actually gave a damn about raising growth.

In terms of holding Medicare "inviolate," what on earth does Keller think he is talking about? The left-left has been pushing for years for measures that would lower costs by reducing the over-payments to providers. The left-left knows well the basic problem of Medicare and health care costs in the United States more generally; we pay our providers too much money. We pay our doctors, our drug companies, our health care equipment manufacturers twice as much as people in other wealthy countries.

The left-left wants to reduce these over-payments, something which appears to now be happening with the recent cost slowdown. Keller's center-left friends would rather protect the income of the providers and force people to accept fewer services and pay more for what they get. (In terms of allowing the market into health care, how about allowing people to buy into other countries' Medicare programs with the government and the patient splitting the savings? Why are Keller's center-left friends so afraid of this market friendly measure?)

Keller later notes that the U.S. economy is "70 percent dependent on domestic consumers, way more than other developed countries." He then contrasts Obama and the center-left with the left-left:

Okay, can Keller really be this confused? It is net exports, exports minus imports, that determine demand in the U.S. economy. Trade agreements have not done a good job of boosting net exports, that is why we have such a large trade deficit. If we shut an assembly plant in Ohio and instead ship a car engine to Mexico to be assembled into a car to be re-imported to the United States that doesn't increase demand or employment in the United States.

If we want to increase share of demand not due to domestic consumption, then we must increase net exports. The key factor here is lowering the value of the dollar. The left-left knows this and talks about making U.S. goods and services more competitive with a lower valued dollar. The center-left repeats gibberish about the virtues of trade agreements which only get taken seriously in public debate because of their money and power. (Btw, there is zero reason to believe that a simple Keynesian increase in demand, based on trade or anything else, won't restore growth to its former path.)

"And a third difference between the near left and the far left is the question of making government more efficient. This is not so much a policy dispute as a mind-set."

Yes, the center-left wants to contract out large amounts of government services to their friends in the business community. For example, we have the deal in Chicago engineered by the center-left former Mayor Richard M. Daley in which the city leased off its parking meters for 75 years to Morgan Stanley. The price was probably about half of the proper valuation. And, in good center-left practice, Daley treated the one-time payment as current revenue to deal with a budget shortfall. The center-left is associated with all sorts of government contracting ventures that don't save taxpayers any money but do make their contributors very rich.

Finally Keller repeats one of my favorite center-left lies. (Sorry, I don't feel like mincing words to be polite just now.) He tells readers:

"centrists favor measures to slow the growth of entitlements: using a cost-of-living adjustment (COLA) formula that more accurately reflects how people spend,..."

Really? Keller knows that the chained consumer price index more accurately reflects the spending patterns of people on Social Security? Yes, I know Keller didn't specify that he was referring to the spending patterns of people on Social Security, he referred to people generically, but no one should waste any time on this sophistry. The point of having a cost-of-living adjustment is to maintain the purchasing power of Social Security checks. To do this the measure must be based on the cost of living of people on Social Security, not the basket of goods and services consumed by people in Equatorial Guinea.

The proposal to switch the indexation of post-retirement benefits to the chained CPI is a proposal for cutting benefits pure and simple. It has nothing to do with an interest in increasing accuracy. If accuracy was the issue then we would be would just have the Bureau of Labor Statistics construct a full elderly CPI and use that as the basis for indexing benefits. Not one of Keller's center-left friends supports this measure.

In sum, it is actually fairly easy to summarize the distinction between Keller's center-left and his left-left. His center-left wants to continue the policies that have led to a massive upward redistribution of income over the last three decades. The left-left wants to reverse these policies and replace them with policies that will lead to more equitable and more rapid growth.

...
written by Kat, December 23, 2013 6:36

It is fortunate you did not read this while watching the Sunday programs or you would have suffered from a conventional wisdom induced aneurysm.

How the Overton Window has shifted!
written by John Q, December 23, 2013 7:45

What Keller is calling center-left used to be the center-right. And what he's calling left-left is the historical center-left.

Optimal marginal income tax rate
written by Steve Bannister, December 23, 2013 8:17

80% - Emmanuel Saez, 2001. Shift back the Overton Window. Best Rx: Tobin tax on financial transactions, optimal income tax rates, raise capital gains and estate taxes, axe the cap on Social Security.

Then, we have a chance to reduce inequality, restore social mobility, and reverse the increasing poverty rate.

The Left-Left Left the Scene as the Right-Right Ruled the Center
written by Last Mover, December 23, 2013 8:18

Which leaves the current Right-Right as foamy mouth reactionaries, the current Right as hard core conservatives, the current Center as moderate fiscal conservatives, the current Center-Left as moderate fiscal liberals (read "loser liberals" at the macro level) and the current Left-Left as socialist redistributionists(read "loser liberals" at the micro level).

Bill Keller like so many other loser liberals, remains trapped in a contrived zero-sum mindset that forces economic framing between growth and its distribution as if from a fixed economic fixed pie when bashing the likes of Elizabeth Warren from the contrived "Left-Left", then conveniently does a 180 in the opposite direction to endorse a postive-sum growth frame to justify and separate the "Center-Left" ... you know, where the real "makers" begin to appear in sharp contrast to "takers" only in "Left-Left".

The left-left wants to reverse these policies and replace them with policies that will lead to more equitable and more rapid growth.

This is what pits and draws everyone together to the right of left-left - including even the foamy mouth crazies who would join with Keller on this one - to rise up in union against the left-left to protect and maintain the 1% who rule the nation not just with economic power, but the overwhelming political power drawn from that economic power (and vice versa).

However explicit or subtle the message from all but the "Left-Left", one part never waivers from keeping the 1% intact, left undisturbed as the "untouchable invisibles from above" by MSM sock puppets ... except by the "radical left-left" of course, who through Elizabeth Warren is actually benign with polite questions compared to real radicals.

The underlying, unchanging message remains: Whatever happens to the 1% has nothing to do with whatever happens to the 99% because, you see:

When it comes to the 100%, it's always cast as a positive sum game about growth that affects "everyone". Yet when it comes to the 1% or the 99%, it's conveniently about a zero-sum game between contrived "makers and takers".

There has to be a "Left-Left" class created mythically to take the blame of "not enough to go around" in zero-sum fashion, because without it, the only place where the real takers - economic predators - can survive ... is in the 1%.

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written by Philippe, December 23, 2013 10:04

"Eliminating tax loopholes is also not just a matter of getting additional tax revenue"

Should be:

"Eliminating tax loopholes is also not just a matter of destroying additional dollar liabilities"

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written by bobs, December 23, 2013 10:20

Putting Keller at center-left moves Nixon to left-left. Clearly something has gone wrong with language.

Truth is, Elizabeth Warren is a centrist and Keller is a right-wing guy. (At least if these words have any meaning.)

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written by skeptonomist, December 23, 2013 10:43

Corrected title for Keller's piece: "Inequality According to a Dummy"

TPs
written by R-rated, December 23, 2013 1:48

The tea party is the opposite of toilet paper, which wipes away feces rather than manufacturing it. The tea party ploy has worked so well that Keller (and Obama?) can fantasize that he is left of center, when he still is fellating the statue of Saint Reagan.

...
written by fuller schmidt, December 23, 2013 2:10

Trading is already taxed as regular income. Why should it be taxed at a higher rate?

Agree, but...
written by Nick Batzdorf, December 23, 2013 4:20

I agree with all of this 100% as it applies to the current emergency, but we also have to take the problems technological advances are creating seriously.

If this is true, we have to figure out how to distribute capital ownership so this doesn't cripple the world:

http://www.technologyreview.com/view/519241/report-suggests-nearly-half-of-us-jobs-are-vulnerable-to-computerization/

And it's totally unseemly that I'm still cracking up at TPs' post...

...
written by Kat, December 23, 2013 4:45

I read the whole awful mess now. Once he started talking about social mobility being the real problem I was off to BTP to get the official response. As bad as described and then some.
Rather ominously he finishes off with

If you want to see good intentions turned into actual success stories, innovation pressed into service against inequality, you should turn your attention elsewhere — to cities. In the new year, I plan to do that.

What cities is he talking about? Chicago? San Francisco? NY? My city? They have most definitely not done much to lessen inequality. Maybe he thinks "no excuses" charter schools and community gardens are the keys to eradicating poverty and building a thriving middle class. I don't know. I know I should probably resolve not to read Bill Keller in the new year.

Referring to an earlier comment I made about Bill Keller on Nov 28 in BTP
written by John Wright, December 23, 2013 10:03

Should one expect any different from Keller.
Here is a portion of an earlier comment I made on Keller on November 28, 2013 in BTP.

"Perhaps the poster child for the deferential news media is Bill Keller of the NY Times, as he either supported/supports the Iraq war, involvement in Syria and "immigration reform" that will likely drive middle class wages lower.

BTW, he is the son of the former chairman and CEO of Chevron Oil, George M. Keller, which MIGHT affect Bill Keller's world view."

Bill Keller, Member of the 0.1 Percent
written by Hugh Sansom, December 23, 2013 10:59

The Times these days requires its 'journalists' to disclose associations that raise obvious questions about their capacity to be 'objective'. The paper grants clear exceptions on issues like Middle East reporting, where Ethan Bronner, Isabel Kirshner and others with family in the Israeli military at one time or another. Economic reporting is another area notable for tacit exceptions. Bill Keller, admittedly not a reporter (and arguably never one), is the son of George M. Keller, one-time head of Standard Oil of California and later Chevron. When Keller lies and dissembles regarding his "left-left" and "center-left", he has a large personal interest in the outcome of the policy debate.

As for mincing words, why would Dean Baker mince words at any time? What is the logic that dictates that lowly peons like myself are liars when we intentionally utter falsehoods, but glorious leaders like Obama or their apologists like Keller are not?

Perhaps Warren and the left-left are being overidealized here?
written by Rachel, December 24, 2013 12:32

Elizabeth Warren is very good about credit card abuses. And she is bright. But does she really understand our health care industry?

Or is she rather under the influence of the SMwG crowd, the ones who want Stuff the doctors' Mouths with Gold, the better to persuade them to save money by cutting back on health care services? Given her occasional enthusiasm in Single Payer, it isn't obvious what she understands. What is more clear, however, is that too many people who like to consider themselves left-left are very naive about the health care industry, and far too willing to tolerate monopoly powers.

-2

Dean Baker was one of the commenters on the NYTimes to this op-ed
written by John Wright, December 24, 2013 9:25

While I believe the NYTimes continues to carry water for the "very comfortable", and Bill Keller's writings serve this purpose, the Times DID accept Dean Baker's comment section rebuttal to this column (and also give a link to BTP).

http://www.nytimes.com/2013/12/23/opinion/inequality-for-dummies.html?comments#permid=10797597

Maybe the Times comments moderator is not sympathic to Keller's advice?

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written by dax, December 24, 2013 10:32

"the one the United Kingdom has had on stock trades for more than three centuries. This would both reduce economic waste (most short-term transactions provide no economic benefit) and limit the fortunes generated in the financial sector."

And the tax the UK has had on stock trades for three centuries has made the UK a shining city on the hill. Well, actually not, because the only people paying that tax are the little people who can't avoid it. Italy has recently put in a transaction tax; the banks are paying more to count how much they owe than they are in paying the tax.

No one has yet put in a real honest-to-God comprehensive transaction tax; and until they do, I think we have to say that the consequences of a real honest-to-God transaction tax are unknown.

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written by Jack, December 24, 2013 12:08

While labels are not to be taken too seriously in any case, it is still the case that words create an image and suggest a reality. Sen. Warren is progressive, but left-left is an absurd description of any member of our elected Congress. She seems to be a responsible representative of the people who sent her to the Senate, but a leftist she is not and left-left would suggest otherwise. Regardless of who came up with that application, Dean should throw it in the same trash can as Keller's center-left description of The Third Way should be deposited.

The Third Way may not be the Tea Party Republicans, but take a glance at the Bd. of Directors of that organization and one quickly realizes that the word left has little to do with the publications that emanate from their resident "scholars." The financial community seems to be the primary source of their Board members;
http://www.thirdway.org/trustees. When did the investment banking community take on anything other than a right of center ideology?

Mr.
written by Pgathome, December 24, 2013 12:11

Centre - left gave us a president that campaigned against the casino on Wall Street, liberty, environmentalism, and open government yet, we got no arrests on Wall street, despite record fines, NSA/drone warfare, more drilling and franking, we will be known as the US of Saudia Arabia, 1/2 of the keystone pipeline approved, and TPP. The left-left was against all of these policies. We now have the leader of the Democratic Party, Hillary, who voted for the Iraq war, our biggest blunder ever, leading the party of venerable-left.

Common ownership
written by Mike Ballard, December 24, 2013 8:56

While the left and right battle it out over how much of the wealth the people who produce and the people who appropriate should own, the communists argue for common ownership of the collective product of labour and ask why 80% of the wealth 90% produce ends up in the coffers of 10% of the population.

Bill Keller's Center-Left Is the Reason We Are Growing Less Rapidly

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