The Mad Tea Party; a looking glass view of economic reality.

Have I passed through a looking glass mirror into a world of inverse economic reality?  Many are upset about bailouts, economic malaise and mounting public deficits.  There is nothing strange about expressing such at the polls, unless it means voting back into power the mind set that brought us the mess in the first place!  As a frightened squirrel about to make it safely across the road suddenly cuts back to disaster, the self styled Tea Partiers seem intent on taking us all on another pass under the wheels of conservative economic dogma.  I am looking for Alice, perhaps she knows the way back to the other side of this inside out world! 

The Tea Party madness has been stoked by the Mad Haters of monied interest news (FOX - as in the hen house).  It is simple really, conservative media tells their audience what they want to hear, in consideration of their well cultivated prejudices and preconceptions that is.  It is good business and good politics, from their point of view.  Focused on the painful nature of the economic cure, the audience readily forgets the disease, especially as most of them voted for the cause in the first place.  

In the Tea Party mind this is all about runaway socialism, not about recovering from the brink of economic collapse.  To anyone that has not fallen down the Mad Haters’ rabit hole of propaganda, it is plain how close cowboy laissez faire economics brought us to utter calamity.  It is a miracle that we are in a recovery at all.      

Mired in economic malaise and national decline, our political process is not working.  The Republican party has long sense ceased to offer an intellectually defensible counterpoise to the Democratic party.  While, any political party is hostage to its native constituencies to some extent, the Republican party has become a wholly owned engine of manipulation.  Run by and for various forms of concentrated wealth, it depends upon emotional manipulation to achieve election majority.  Fusing the politics of greed with the politics of ignorance, the party taps and cultivates xenophobia, homophobia, gunomitophobia, huntomitophobia, raceophobia, along with various economic, religious and political dogmas; playing on emotions not to reason in pursuit of its owners’ special interest agenda.  

For a generation, the Democratic party has failed to project a reality based vision to counter the Republican party’s fear and faith illusions. lacking faith that the American electorate is capable of responding to intellectual arguments, the Democratic party has condemned itself to a fruitless search for its own emotional levers.  

Economics provides an example.  The central Republican economic dogma is that only the private sector delivers prosperity, the public sector can only be in the way and jobs and prosperity depend upon low tax rates for the wealthy; it is the American way.  These twin messages are delivered as if in surround sound with the regularity of a prayer wheel.  Both of these ideological concepts are at best gross exaggerations and do not reflect America’s pragmatic economic tradition.  Yet they are firmly entrenched in the popular mind and the Democratic party is not willing to directly dispute them even though they have brought two near economic collapses in a generation and underpin the Tea Party’s efforts to turn us all back for another pass at economic disaster.  

Last month over a hundred and fifty thousand state and local public sector workers were laid off.  Nearly fifty thousand of these jobs were teaching positions.  However, it was not uncommon to read or hear that this was not such bad news because there were sixty four thousand private sector jobs created in the same period (mostly low paying food and retail service jobs).  Implicitly, the ninety five thousand net loss could be discounted because they were public sector jobs!  

Let examine this concept.  Both kinds of jobs make a living, both kinds pay mortgages and taxes.  So what is the difference?  To most Americans, who have heard the mantra for so long, the answer is self evident.  The private sector jobs produce something of value while the public sectors jobs are just “in the way”.  Sure, you knew that!  

Plainly, the porn star is an eye opening private sector asset but a public school teacher that opens eyes to knowledge is a leach.  The marketing vice president whose job is to sell your children carbonated sugar water at outrageous profit margins, most to be spent on marketing to sell them more, and the physician who treats the resulting diabetes are the economic foundation of domestic prosperity.  But, the public sector physician who works to prevent disease is a hole in our economic boat.  The Wall street investment banker that securitizes dubious mortgages and sells them to your pension plan as “AAA” rated securities is worth tens of millions of dollars of private sector productivity a year, while the bank examiner who is working to assure the integrity of the financial system is a 100k drag on the economy.  The reckless cost cutting BP drilling manager is doing the lords work, but it does not matter if the energy department employees that are suppose to regulate that activity are competent; they are only there to humor those who think government is important. The internet was a federal boondoggle when it was being created but now, with the spammers trying to unlock its marketing potential, it is a boon to humanity.

In this view you can transform a public sector drag into private sector asset by simply contracting out the task, be it a school, a prison, military security or garbage collection.  The metamorphose in value is readily apparent as a professional public service manager making a professional wage will be replaced with an entrepreneurial CEO making an obscene living, paid largely with stock options taxed at a reduce capital gains rate, the later will fire most of the high level personnel, replace them with minimum wage functionaries, join the country club, the Chamber of Commerce and tithe to the Republican party.  Oh, and hire a lobbyist to keep the money coming and avoid any scrutiny into the quality of the job being done.  Thus, instantly the world is a more prosperous place.  Surely you are starting to get the picture.  

It is past time for a little economic truth of the forgoing kind but we aren’t getting it from the Democratic party. How about another sample.  Human initiative and greed are universal.  It follows then that the disparity in economic success between nations is not genetic, despite what our politicians tell us (“most productive workers in the world”).  Rather, hold on to your tea cup now, prosperity is the result of a properly conceived and managed public sector.  Yes, believe it or not, a responsible public sector literally makes it possible to turn paper into gold.  

Our government was constituted, “to promote the general welfare” and empowered to “regulate commerce”.  Government, the law that define and regulates private contractual relationships, creates and regulates a monetary and financial system, weights and measures, public infrastructure for transportation and communication, a public education system, these are the foundational prerequisites of a modern economy.  They are not by products of Adam Smith’s invisible hand.  They have to be paid for with taxes and have to be voted into existence.  Nations with effective public sectors, that educate their people and regulate commerce to assure private activity is productive not destructive and invest in public infrastructure are wealthy.  Those that lack these public sector assets aren’t.  

If a people insists on electing people to public office who don’t believe in government they should not be surprised when they don’t get government.  Without government, you should not be surprised if bridges collapse, damns break, children are not educated, oil ends up on beaches, drinking water is polluted, the economy is undermined with fraud and abuse and your retirement is stolen.  It is that simple.  Hay, but your taxes may be lower.

How about another surprise.  Public sector deficit spending is not an inherent evil and our current deficit is not a bad thing given the economic situation, in fact (hold on to your cup and saucer this time) in the short run it should certainly be higher!  In times of economic chaos, government becomes the investor of last resort stabilizing the economy and restoring confidence.  It is widely accepted that the depression was prolonged by a Tea Party style impulse that prematurely trimmed the seemingly burgeoning deficits (two thirds of the federal budget was being borrowed at one point) leaving it to the even larger deficits brought by the war effort to finally turn the inertia of economic contraction.  

After the war the Nation’s debt dwarfed anything that the depression era tea party mentality could have conceived  but the technological and industrial benefits of the war effort were such that the deficit essentially melted away in the resulting post war economic boom.  Just as an individual or business can profit by borrowing for an education or other investment so can a nation.

So how about those laid off public workers and especially the teachers?  But for the Tea Party mentality, a relatively modest additional borrowing by the federal government could have kept those people in their jobs.  The news would have been that jobs grew by sixty four thousand last month rather than shrank by ninety five thousand and there would be a hundred and fifty nine thousand more people paying taxes and producing something of value instead of drawing unemployment.  There would be fewer mortgages going delinquent and that many more confident consumers. It is entirely conceivable that the net result of having borrowed a little more money to pay these people to work rather than a little less money to pay them not to work would be less public debt not more within a short time.  

But we should not ignore the lost value of what they are not now doing.  Lets assume that on average each of those forty eight thousand teachers would have inspired one student this year to a new ambition or seen one through an educational rough spot, maximizing their personal potential, what is the economic cost of that?  We wisely borrowed to save thousands of autoworkers jobs and the industrial base that would have been lost with those jobs as part of a plainly successful strategy to interrupt an on going economic free fall, but fail now to carry through the logic to borrow a bit more to preserve necessary public service jobs, including nearly fifty thousand teaching positions?   

It makes no sense for government to follow the private sector into contraction, perpetuating the downward economic spiral.  The later course only makes sense to those who have an irrational fear of public expenditure derived from the view that it will mean higher taxes for them or competition for consumer dollars from the public sector.  These are the true self interest motivations for depreciating the value of public sectors services, not economic reality.  Which brings us to the other foundational economic falsehood of the greedy right.

At the end of the First World War the marginal federal income tax rate was 77%!  This began a period of sustained economic growth, so much so that taxes were cut five times before the party ended in the depression.  Taxes were cut because of growth, not the other way around.  At the end of the Second World War the top marginal rate was 95% and remained north of 90% for nearly twenty years until 1964 when it was reduced to 77%!  Again an unprecedented period of prosperity.  After the false period of borrowed prosperity under Reagan and Bush I, Clinton raised taxes retroactively and contrary to the dire predictions of the renown economist, Dr. Rush Limbaugh of Talk Radio University, the country entered another period of exceptional growth, with shrinking deficits and a rising dollar.  There is no evidence that marginal tax rates on truly wealthy incomes has any demonstrable impact on job creation or economic activity.  Responsible government does, as unfortunately does irresponsible government, as we all should now well know.  

But economics is only one issue.  The country cannot have a rational debate about any topic because the Republican party will engage its propaganda machine to distract the voters from the facts and the issues with emotionally charged falsehoods.  Health care reform, education, competitiveness, even war.  You name it, reason is not going to get a hearing. Legitimate difference in philosophical views will not be addressed.  

To anyone with any sense of history, which unfortunately many of our children and young even not so young adults now lack, it is apparent that the human race is on a grand and limitless adventure of discovery.  In her time America has played a leading role in that adventure - until recently.  Post Vietnam, it is now plain, America lost its way and with it any unitary sense of purpose or even of its identity.  We have become in our own eyes and that of others a hedonistic society, defined entirely by what we consume not what we produce or contribute.  It is this and what it means for our children’s future that is truly bothering the American people.  The Tea Partiers my be deluded but they are patriots; it is this sentiment by which they are being manipulated.  

The economic right tells us that our national well being depends upon private consumption.  Low taxes and small government mean more dollars for Walmart, in the short run at least.  However our nation has not historically been defined by what we consumed individually but by what we have built and done together.   When we explore civilizations past, we may dig in refuge for insight but it is their public works and their collective contribution to human knowledge and culture that we judge them buy.  

This country last knew itself, had a sense or purpose and direction, when it was going to the moon, when it was committed to the public education of its children and their physical health, was at war with true totalitarianism, when marginal tax rates on the income of the well to do were north of 90% and the President could stir the public with, “ask not what your country can do for you, but what you can do for your country”.  

We will not recover what has been lost in mindless personal consumption, by filling landfills, attics, and storage buildings with chinese made products, nor in building empty condominiums and grotesque homes by the thousands.  Prosperity will not be found in the flat earth economics of the Tea Party, nor will purpose be found in the racist xenophobic politics of the modern Republican party, nor unfortunately in the cowardly non vision of today’s Democratic Party.  America as it was and should be cannot be based on a education system that only teaches the three “Rs” (code for a bare bones occupationally functional education that the Chamber of Commerce will endorse).

The path back to the future for America is not really all that obscure, though to ears unaccustomed to hearing reality it may well sound radical.  It will not be found as long as one political party remains a shameless dissembling special interest propaganda machine and the other lacks the confidence to directly challenge that dissembling with the truth about where we are, where we have been and what a path forward must look like.