Trump's Proposal Was Radical-- AOC And Elizabeth Warren Are Reformers

I wish that crazy Trump would just settle down and go spend his days playing golf again so AOC could get Congress working on a sensible agenda. You know who's work I'm really enjoying? Eric Levitz at New York Magazine. Once a poetry lecturer at Johns Hopkins, this guy has been writing excellent essays on the nexus of where politics meets the world of finance. And this pinned tweet is pretty awesome too, don't you think?

His latest, AOC Thinks Concentrated Wealth Is Incompatible With Democracy. So Did Our Founders, shows he still has a poetic heart. He's become a reliable defender of Alexandria Ocasio every time the forces of the extreme right mass against her and her program. When Hannity spewed out his creed about how "general economic equality is not a precondition for the American dream, but rather, an insurmountable obstacle to it," as a way of trying to rouse his viewers against Ocasio's tax ideas, Levitz noted that "after popularizing the idea of a 70 percent top marginal tax rate earlier this month, the freshman congresswoman recently suggested that the mere existence of billionaires was both immoral, and a threat to American democracy."

What Ocasio said (in an interview with Ta-Nehisi Coates on Martin Luther King Day) was that she doesn't "think that a system that allows billionaires to exist when there are parts of Alabama where people are still getting ringworm because they don’t have access to public health is wrong.” The day day Ocasio approvingly quoted an op-ed by the economists Gabriel Zucman and Emmanuel Saez, which argued that the purpose of high taxes on the wealthy wasn’t merely to generate revenue, but rather, to safeguard "democracy against oligarchy." Recall, these are the two who have been advising Elizabeth Warren on the matter of her wealth tax proposal.

Hannity’s not buying it. The Fox News host informed his audience Wednesday that Ocasio-Cortez had “called the American dream immoral,” and that she wants to “empower the government to confiscate” said dream. “Better hide your nice things,” Hannity advised his audience (whom he ostensibly believes to be composed primarily of billionaires), “because here come the excess police.”

Hannity and his attorney

Hannity was hardly alone in deriding AOC’s antipathy for billionaires as fundamentally un-American. But in reality, there’s nothing foreign or communistic about the idea that concentrated wealth is incompatible with democracy, or all-too compatible with mass poverty. Republicans might call such notions radical. But many of our republic’s founders would have called them common sense.

Compare AOC’s first argument-- that the simultaneous existence of billionaires and poverty is immoral, and thus justifies steeply progressive taxation-- with Thomas Jefferson’s reflections in 1785. During a visit to the French countryside, Jefferson found himself scandalized by “the condition of the labouring poor.” In a letter to James Madison, Jefferson wrote that the extremity of European inequality was not only morally suspect, but economically inefficient. Aristocrats had grown so wealthy, they were happy to leave their lands uncultivated, even as masses of idle workers were eager to improve it. Thus, these proto-billionaires undermined both the peasants’ ability to transcend mere subsistence, and their society’s capacity to develop economically:

[T]he solitude of my walk led me into a train of reflections on that unequal division of property which occasions the numberless instances of wretchedness which I had observed in this country and is to be observed all over Europe. The property of this country is absolutely concentered in a very few hands…I asked myself what could be the reason that so many should be permitted to beg who are willing to work, in a country where there is a very considerable proportion of uncultivated lands? These lands are kept idle mostly for the aske of game. It should seem then that it must be because of the enormous wealth of the proprietors which places them above attention to the increase of their revenues by permitting these lands to be laboured.

Here is how Jefferson proposes to address the obscene coexistence of concentrated wealth and underemployed workers:

I am conscious that an equal division of property is impracticable. But the consequences of this enormous inequality producing so much misery to the bulk of mankind, legislators cannot invent too many devices for subdividing property, only taking care to let their subdivisions go hand in hand with the natural affections of the human mind. The descent of property of every kind therefore to all the children, or to all the brothers and sisters, or other relations in equal degree is a politic measure, and a practicable one. Another means of silently lessening the inequality of property is to exempt all from taxation below a certain point, and to tax the higher portions of property in geometrical progression as they rise. Whenever there is in any country, uncultivated lands and unemployed poor, it is clear that the laws of property have been so far extended as to violate natural right…It is too soon yet in our country to say that every man who cannot find employment but who can find uncultivated land, shall be at liberty to cultivate it, paying a moderate rent. But it is not too soon to provide by every possible means that as few as possible shall be without a little portion of land. The small landholders are the most precious part of a state. [Emphasis Levitz's.]

If Ocasio-Cortez’s views are un-American, then surely these words from our third president’s are, as well.

...[AOC is] channeling one deeply rooted strain of American thought on economic morality. And while that strain might have been marginal among the leaders of the American Revolution, it was pervasive among its foot soldiers (there’s a reason the leading propagandist of the war effort, Thomas Paine, was one of the earliest champions of an American welfare state).

Regardless, Ocasio-Cortez’s second argument against the existence of billionaires-- that concentrated wealth is incompatible with genuine democracy-- was something close to conventional wisdom among the founders (including those who opposed democracy).

America’s first political theorists took these truths to be self-evident: that a person could not exercise political liberty if he did not possess a modicum of economic autonomy, and that disparities in wealth inevitably produced disparities of political power.

The notion that political freedom has a material basis did not originate with Karl Marx and the creed of Communism; it was a core idea of the 17th-century British political theorist James Harrington, and his formulation of classical republicanism. A man who does not own the means of his own reproduction can never exercise political freedom, Harrington argued, because “the man that cannot live upon his own must be servant.” Likewise, the man of immense wealth-- whose fortune consigns great masses of men to servitude-- is inevitably a kind of tyrant. After all, “where there is inequality of estates, there must be inequality of power, and where there is inequality of power, there can be no commonwealth.”

These premises deeply informed the American founders’ conception of republican liberty. The Jeffersonian ideal of a yeoman’s republic derived from the conviction that only independent landowners were politically free-- and only a (very) rough equality in the distribution of land could preserve such freedom. Even a consummate elitist like Alexander Hamilton couldn’t help but echo Harringtonian thinking, writing in the Federalist Papers, “A power over man’s subsistence amounts to a power over his will.”

...Thus, Ocasio-Cortez’s belief in the moral necessity of mass democracy (and women’s suffrage, and the abolition of slavery) would have struck many a Founding Father as radical. But her insistence that true democracy is incompatible with America’s present distribution of property-- in which the richest 0.1 percent of Americans command as much wealth as the poorest 90 percent-- would have struck Jefferson & Co. as tautological. And a large body of political science research suggests that their shared intuition is correct.

All of which is to say: If the right to self-government is an inextricable component of the American dream, then it isn’t AOC who regards that dream as immoral-- it’s Sean Hannity, and every other multimillionaire who believes that legislators should not invent “many devices for subdividing property.”

Yesterday Stephanie Kelton reminded me that Warren's wealth tax proposal went from the 2% she proposed for wealth over $50 million to 3% on wealth over a billion dollars. Trump's proposal called for real confiscation-- 14.25%. AOC and Warren are just sensible reformers. Kelton was on NPR's Marketplace Thursday. She told Kai Ryssdal that "If you control your own currency and you have bills that are coming due, it means you can always afford to pay the bills on time. You can never go broke, you can never be forced into bankruptcy. You're nothing like a household. Ryssdal tried explaining what he took away from his talk with her and what MMT is all about.

Because the government controls how many dollars are out in the economy, Kelton and MMT said Congress and the president shouldn’t worry about balancing the money coming in through taxes with the money going out to fund government programs.

For those of you screaming “Inflation! Inflation! Inflaaation!” at the idea of the government creating fresh money every time it needs to pay the bills, calm down. The MMT economists know about Weimar, Germany, too. If Congress stops worrying about balancing the budget, Kelton said the government could spend too much money into the economy with ambitious programs and end up causing inflation.

That’s where tax policy comes in. Kelton said taxes can act as a “release valve” for inflation.

To wrap your brain around this concept, picture a bathroom sink. Think of the government and its ability to create more money whenever it needs to as the faucet and that bucket area of the sink where the water goes as the economy.

The government controls how much money, or water, is flowing into the economy. It spends money into the economy by building interstates or paying farm subsidies or funding programs.

“And so as those dollars reach the economy, they begin to fill up that bucket, and what you want to do is be very mindful about how full that bucket is getting or you're going to get an inflation problem,” Kelton said.

Inflation is where the sink overflows. If that happens, Kelton said there are two ways to fix it: “You can slow the flow of dollars coming into that bucket. That means the government then has to start slowing it's rate of spending, or you can open up the drain and let some of those dollars out of the economy. And that's what we do when we collect taxes.”

Let's back up for a second and think how this stuff works. Chairman Jay Powell and the gang at the Federal Reserve are the people thinking about the economy's big picture and keeping that water level right.

The Fed uses monetary policy-- interest rates-- to keep that sink we were talking about from getting too empty or too full. The MMT folks want Congress to be doing that using fiscal policy-- government spending and taxing decisions.

Randall Wray, a senior scholar at the Levy Economics Institute at Bard College and one of the developers of MMT, said he thinks the Fed should stop focusing on inflation.

“If you ask what I think ideal monetary policy would be, what the Fed really should do is stabilize interest rates at a low level," he said.

The catch, of course, with telling the Fed to just keep interest rates low and controlling inflation with fiscal policy is the political reality in Washington.

“The making of fiscal policy, it’s never neat and tidy. It’s not efficient,” said Sarah Binder, senior fellow at the Brookings Institution and a political science professor at George Washington University. “The political constraints on members makes it harder to use fiscal policy and to use tax policy,” she said.

Running the federal government the way the MMT economists would if they were in charge would require Democrats and Republicans to change the way they think about fiscal policy and monetary policy.

Larry Kudlow-- De Minimis

Perhaps you weren't born in 1994-- or maybe not reading the NY Times yet. So... in light of Larry Kudlow popping his head of of his West Wing hole today, let's take a ride back in the long-time-ago-time-machine. Sylvia Nasar and Alison Cowan-- hey Alison!-- began their feature by noting that "Kudlow seemed a master of the universe. Being a top Wall Street economist was not the half of it. Mr. Kudlow had been a prominent member of President Reagan's economic team. He helped conceive and fight for the tax-cut proposal that helped Christine Todd Whitman become Governor of New Jersey. One of the nation's most articulate and charismatic commentators on financial issues, he has become the economic guru of Jack Kemp and of the conservative radio host Rush Limbaugh, as well as a regular on television interview programs and a speaker commanding hefty fees. He even starred in Cadillac ads."

Republicans were thinking about running him for the Senate, against Pat Moynihan. Or talking him up as a cabinet secretary if a rightist were to win the presidency. "A hot political property," they wrote, "he had nowhere to go but up." But then he was fired from Bear Sterns and exposed as a coke freak.

[L]ast week, in an interview, Larry Kudlow had a confession to make: behind the polished facade lived a troubled and deeply unhappy man who has been battling an addiction to drugs and alcohol.

Swiveling in his chair in the offices of his new employer, National Review magazine, Mr. Kudlow lighted yet another Merit Ultra Light and began an explanation that many others would not summon the courage to make: Fifteen months ago he took a four-week medical leave of absence from his Wall Street firm, Bear Stearns.

"I went into drug rehab," Mr. Kudlow said, deciding to discuss his problem after being told he was the subject of a profile. "I had an alcohol and substance-abuse problem that needed to be taken care of."

He said that for 15 months he has been attending twice daily a self-help program for recovering addicts.

"I am willing to share with you my problem," he said, following the example of many people in programs like Alcoholics Anonymous. "Anyone who blames Bear Stearns is not right. I take full personal responsibility."

Then this dapper man in a blue pinstripe shirt and monogrammed cufflinks, a man sometimes described as poker-faced, began to cry. Sounding scared, not at all like the suave raconteur and deft name dropper of two hours earlier, Mr. Kudlow said he lived in fear of sliding backward. "I live my life day to day," he said.

...Kudlow attributes his slide partly to pure pressure. On Wall Street there are producers and then there's everyone else, and the pressure to produce helped drive Mr. Kudlow to drink and drugs.

...Another problem was that when he felt down, he didn't know how to turn to a friend. He described himself, for all his gregariousness and bonhomie, as a man who spent much of his life isolated, ashamed to let others know him well enough to share his failings and embarrassments along with the successes.

"I never had any friends beyond a certain superficial level," he said. "We hate to admit weaknesses. We were raised to want to get ahead, to be good and clever and successful. You're just ashamed to open up."

A re-invented hippie draft-dodger with 3 wives and Jewish convert to Catholicism, Kudlow's life has been marked by wild and unpredictable swings. His doctors have told him that if he took another high stress job it could lead to his death. In fact, in June he had a heart attack.

Last week, Kai Ryssdal interviewed him for NPR's Marketplace (up top) and he sounded like a truculent moron pushing failed, trickle down economic policies. Here's an excerpt I was listening to last week in real time. It ws a discussion about trade policies and the impact of tariffs on the American people. It made me wonder if they removed his heart in June when he was in the hospital:

Ryssdal: We had a Republican congresswoman from Indiana on the program yesterday whose name is, her name is Jackie Walorski, she's from the Indiana second and I said to her...

Kudlow: From the what?

Ryssdal: Indiana's 2nd congressional district right. She's a Republican, went heavily for the president in the election. She supports the idea of a new trade regime under this president. But I said to her tell me what your constituents are saying and this is Elkhart, Indiana right. They made RVs, they make all those things that depend on steel and she said people are coming to her saying “we want to know when it's going to stop. When's it gonna stop?”

Kudlow: It being?

Ryssdal: It the tariffs and the pain that is happening to American companies and consumers from these tariffs.

Kudlow: I think that, look I appreciate, I don't happen to know this house member but you know I appreciate the concern, absolutely. But I will say so far the pain has been de minimis, really very little.

Ryssdal: Look, sir, really with all respect that's easy for you to say sitting here on the second floor of the West Wing of the White House.

Kudlow: Now, don't class warfare me or anything like that. I'm telling you quantitatively we follow this very closely because we are concerned about it. There is very little impact, almost unmeasurable impact on real GDP. OK? That's a fact. It may be out there. I don't want to predict U.S.-China relations on trade but I'm just saying, thus far, in GDP terms, it's been nothing, unmeasurable. Now, there are worries, I get that and I respect those worries. Some farmers have been hurt probably the soybean area has been the clearest and hardest hit. Soybean prices are off about 20 percent and there may be other things besides trade but I think it has a big, big to do with China's tariffs. So I'm going to, I'm going to even that out. I'm going to sell so many bushels of soybeans to Europe that I'm going to take the price back to $10 and take China out of the calculus. That's one of the things that came out of the EU deal and that's by the way literally written in the, in the, in the final statement. We are prepared to help the farmers if we need to. As the president has indicated we could come to their rescue for a considerable sum of money. Thus far it's not necessary. I personally don't think it's ever going to be necessary. But my crystal ball is not perfect here. Other than that, I can't, I just don't see anything yet.

Yesterday Kudlow claimed in an interview with Politico that "These are very good times and the midterms will be a report card on that," despite the fact that only the wealthy are feeling the Republican tax cuts and despite the fact that wages are down since Trump entered the White House.

“The confidence indices are telling a very important story, and POTUS is polling in the low to mid fifties on the economy,” Kudlow said just before returning to the White House after some time off. “The great blue wall has crashed. I think GOP will lose seats but keep the House.”

Republicans are counting on faster growth and a low jobless rate to help them hold off expected Democratic gains in swing districts where Trump polls poorly. Democrats need a net gain of 23 seats to retake the House.

But so far, the economy has not played a major role in special elections, with Republican candidates talking more about guns, immigration and other hot-button social issues while painting Democrats as liberal extremists.

Trump himself often touts strong economic numbers-- including the second-quarter growth rate of 4.1 percent-- but also gets repeatedly sidetracked by the Russia investigation and stories like the recent tell-all book from his former top aide Omarosa Manigault Newman.

Republicans also have to deal with a tax-cut bill that focused on lowering corporate rates and remains widely unpopular with the public. A poll in June by Politico and Morning Consult found that just 37 percent of voters supported the tax cut, down from 44 percent in April.

Democrats are also hammering at any signs that Trump’s tariff battles with China and his levies on steel and aluminum are costing U.S. jobs while driving up prices for consumers. And they note that when adjusted for inflation, earnings are flat over the last year, if not slightly lower.

Kudlow rejected that measure of wages and said workers were feeling better about the economy in ways that will help the GOP.

“All you have in [the Consumer Price Index] is a bump up in oil prices,” he said. “And energy prices are already coming down. The dollar is strong. The more important measure is real disposable income and it’s booming.”

Kudlow added that he continued to see real momentum in talks with European Union leaders to avoid a tariff war and lower existing levies.

“We set up a process and they are coming back here. And I’ll be going to Brussels,” he said. “I grabbed ahold of this and I’m not letting go.”

Republican incumbents trying to save their seats have learned to never mention the unpopular Trump tax cuts and they complain that the fake spike in the economy isn't reaching working and middle class voters, so they don't talk about it on the campaign trail. Perhaps Kudlow should introduce himself to Rep. Jackie Walorski from Indiana's second district and discuss it with her. Even washed up old stoners can learn something useful once in a while.

Besides, this doesn't sound very de minimisy: U.S. Farm-Export Prices Drop Most Since 2011; does it? Do any farm states have Republican legislators up for reelection in November?