Should American Progressives Be Calling for a “Public Option” in Banking?

Proposals for a public banking option are almost unheard of in the U.S., where free-market orthodoxy has, throughout most of our history, held sway over collective approaches to the provision of public and private goods and services. Nonetheless, the concept deserves serious consideration based on the evidence in at least a couple of areas. First, there is the striking success of this model in other advanced and advancing economies for providing and directing lower-cost, long-term capital essential for growth. And second, while better financial sector regulation, oversight, and enforcement might mitigate the worst excesses of an opaque multinational private banking system, it remains doubtful that the resources of regulators can ever match those of the private banking system to circumvent regulations and evade the consequences of wrongdoing.

It is now widely understood that the private global banking and financial system has failed to serve the “real” economy, or what we often call, “Main Street.” This is not just the case in the U.S. Europe’s problems, while largely due to an ill-designed monetary union and the high sovereign debt of certain member countries, has been exacerbated by the same short-term-profit-driven, casino approach that has characterized the U.S. financial sector.

Perhaps the time has come to consider another model, one that treats banking and finance more like a public utility. A public bank would not have to be beholden to shareholders demanding a 20% annual return. It could circumvent incentives that induce management to take extraordinary risks (cognizant that in the worst-case outcome, taxpayers will bail them out) to boost short-term stock value. A public bank that didn’t demand usurious 30% interest rates on credit cards, didn’t charge outrageously high penalties and fees, and doesn’t raise your rate when you’re a week late on your payment would lower both the cost of living and the cost of doing business for small and medium-sized firms. A public option in banking, then, could benefit just about everyone, except, of course, financial sector executives.

Back when electricity was still a public utility, before the rate increases that industry advocates swore wouldn’t happen with a privatized and deregulated electric power sector, the electric company didn’t permanently raise your rates when you paid the electric bill a few days late – so why should that be allowed by your bank? Wouldn’t a modest, reasonable late payment fee to the institution cover the real cost of your late payment? It works that way for public banks elsewhere in the world.

The German “economic miracle” after World War II was based in part on a public banking system that worked alongside a robust private banking sector. The two are not mutually exclusive. A public option in banking, much as it would in health care, could rein in the more reckless impulses of the private banks, and help to ensure a more stable economic environment that fosters productive long-term investment and entrepreneurship.

Peter Dorman, professor of economics and researcher on environmental policy describes the German public banks, known as “landesbanken” as:
“…publicly owned entities that rest atop a pyramid of thousands of municipally owned savings banks. If you add in the specialized publicly owned real estate lenders, about half the total assets of the German banking system are in the public sector. (Another substantial chunk is in cooperative savings banks – institutions owned by their depositors.) They are key tools of German industrial policy, specializing in loans to the Mittelstand, the small-to-medium sized businesses that are at the core of that country’s export engine. Because of the landesbanken, small firms have as much access to capital as large firms; there are no economies of scale in finance. This also means that workers in the small business sector earn the same wages as those in big corporations, have the same skills and training, and are just as productive.” [Emphasis added]

Many of the most dynamic economies – those that have proven more resilient in the face of recent global financial crises – also have strong, stable publicly owned banks. India, China, and Brazil all come to mind. But there’s even a U.S. state economy that has fared pretty well, and it is the only state that has a state-owned bank. North Dakotas is the only state that has had a budget surplus every year since 2008, has the lowest unemployment rate of any state, and the lowest default rate on loans. North Dakota does have oil, but so do other states that are not faring nearly as well. Still, the German landesbanken system is, on the whole, likely the best model for consideration in the U.S.

After WWII, the German economy was in a state of collapse. Ten years later there were signs of an emerging economic miracle. Twenty years later, the German economy was the envy of the world, an economic powerhouse producing autos, machinery, chemicals and electrical equipment. Today, German unemployment stands at 6.8%, GDP growth in 2010 was 3.6%, manufacturing accounts for a quarter of GDP, and underlying this success are the small –to-medium sized firms that are supported by lending for R&D by the public banking sector.

There are multiple factors that aided the German miracle, of course. Post-war debt forgiveness, currency reform, and the elimination of price controls are oft-cited and must be credited with liberalizing the German economy. But the strong public banking system, designed to serve the public interest rather than private profit, has been instrumental in helping small firms secure a presence in global markets.

The tradition of public banking in Germany dates to the late 18th century when municipal non-profit banks were set up to help low income people save small sums in a secure institution. The banks were effective and popular, and they spread quickly. By the beginning of the 20th century, there were nearly 3,000 publicly operated banks in Germany. Today, a network of nearly 16,000 branches employs 250,000 people. They have a strong record of prudent investing in local businesses, which has supported community economies, and helped small firms reach global markets while making the landesbanken players in international markets.

Not all is rosy for the landesbanken. They have been under pressure since 2000 from private financial sector competitors (that comprised only 20% of the German market in 1999) pushing for privatization. Criticisms of the public banks revolve around a number of issues. Private banking sector advocates point to the low profitability of the public banks, and offer arguments in favor of privatization based on free market orthodoxy about “economic efficiency.”

While true that in general, profits are lackluster among Germany’s public banks, they have been incredibly steady in the postwar years. Comparing the tradeoffs between a banking system treated as a public utility aimed at serving long-term national economic goals, stable employment, and non-economic purposes such as community (and thus, social) stability versus an opaque and complex financial sector driven by short-term profit motives and treated as an end in itself, and subject to human greed and the vicissitudes of the market, a public option makes sense. Given that Germany’s public banking institutions have avoided much of crisis precipitated by huge losses that large private banks, gambling on exotic creations such as collateralized debt obligations and credit default swaps, have faced in recent years, the choice seems obvious under objective analysis. The public banks do what banks are supposed to do, accepting customer deposits and earning a modest profit by lending those funds out to businesses and individuals. They are stodgy, stable, institutions that serve the financial needs of their communities and thus promote economic stability and growth.

In fairness, it must be noted that under pressure to increase profitability, and branded as “bureaucratic” by opponents, Germany’s landesbanken did dip into derivatives markets and CDOs that were fraudulently rated triple A, but the extent of losses were miniscule compared to those of Goldman Sachs, Deutche Bank, Lehman Brothers, Citigroup, and other major private institutions. And in the end, the public is bearing the brunt (and will bear the brunt in future crises) of bailouts to private sector financial institutions anyway.

Given what would seem significant benefits of public banking, one ought to ask, “Are opponents’ arguments really based on their claims of economic efficiency, or merely a desire for the market share controlled by the popular landesbanken?”

In addition to pressure from Germany’s large private banks, calls for privatization have also come from the still-staunchly-neoliberal European Central Bank (ECB) and IMF leaders, who denounce the public banking system as violating established rules of competition. In a sense, that claim is correct, but perhaps it is neoliberal rules of competition that ought to be questioned. After all, what we’ve seen during the past decade or so is that so-called “free market/free trade” economies like the U.S. have been consistently losing out to mercantilist (export-led growth) approaches in countries like Germany, China, India, Brazil, and others. The ECB and IMF critiques of Germany’s public banks are based on an overtly ideological stance founded on an increasingly questionable neoliberal approach to economics and finance.

Despite their popularity with the German public, and their success at helping Germany become an economic powerhouse in the postwar era, the foundations of the landesbanken have been severely undermined in the past decade. The European Commission ruled in 2001 that the explicit state guarantees that allowed them to acquire and lend capital at better rates than private banks must end. This forced them to compete on the same terms as private banks (and propelled their ill-fated entry into derivatives and CDO markets, then seen as offering higher returns). Today, the landesbankens’ implicit state guarantees are not being considered in the “stress tests” for banking solvency that the European Banking Authority is conducting.

Thus, while privatization, widely unpopular with German voters, has not occurred, the landesbanken have been substantially stripped of the very thing that has made them able to serve the public interests of stability, low lending rates, and financial security. They no longer have the full faith and credit of government and the public behind them. They have been stripped of their ability to serve the public interest and forced to focus on the profit motive, leaving little to separate them from private sector banking institutions. That is a tremendous loss for Germany that will become increasingly clear in the years and decades ahead.

Essentially, the argument for or against a public option in banking comes down to this:
If one believes that an economy should be organized to meet broad, socially defined needs, you would support a public option in banking, even if the profits of individual institutions are modest. You would advocate that at least a portion of capital allocation should be responsive to public input. If you believe the market should allocate capital, except in rare cases of market failure, you would advocate for privatization (and deregulation) of the banking sector, even if it led to an increasingly unequal distribution of wealth and an exacerbation of boom-and-bust business cycles. The fact that markets tend to overreact rather than achieve stable equilibrium, in large part thanks to the herd dynamics of investors, would be irrelevant to you.

The long history of success that the landesbanken model has demonstrated in Germany, promoting economic growth and stability, enhancing the returns to investments in R&D, and providing a foundation for small and medium sized business employment has fallen victim in the past decade to the propaganda of neoliberals and profit-driven private bankers. That is unfortunate for the large majority of German citizens and workers. U.S. political leaders that are influential in formulating our banking and financial sector rules and regulations ought to look beyond the propaganda. They should consider the appropriate role for the banking sector in our economy. They might find that a public banking option, modeled on the landesbanken prior to the recent decade, might better serve Main Street rather than Wall Street.

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Support Families like Mine: End Inequality in Immigration Policy

Luis and Paul Wedding Photo with families

Family photo at our wedding

I’m one of the lucky ones – lucky because I’ve had the good fortune to share the past ten years of my life with the person I love, despite the fact he’s a Mexican citizen, and I’m an American citizen. I’m lucky because, in 2001 when we met, I had the resources, ability, and the option to move to Mexico and establish a business and a life with Luis. I’m lucky because Luis and I built a rich and rewarding life together.  We enjoy the love and support of both our families, we have a wonderful circle of friends, and we’ve been able to give back to our Mexican community in ways that have been incredibly satisfying.

Unfortunately, the past two years have shown us just how fragile that luck has been. My business, a small resort hotel catering to LGBT vacationers to Puerto Vallarta, has suffered greatly since the U.S. economy took its nosedive in late 2008. In 2009, Mexico was the epicenter of the H1N1 flu scare – it nearly shut down the tourism industry for a couple of
months. And mounting concerns over the safety and security of travel to Mexico due to drug cartel violence has further decimated the tourism industry and my once-thriving business, despite the fact that the violence is enormously hyped by U.S. media and is mostly localized in a few cities far from Puerto Vallarta. Times are hard.

The economic realities of a struggling business in Mexico have compelled me to return to the US in search of work that will support us.  My options in Mexico are limited by immigration laws there regarding employment of foreigners. Luis, of course, cannot join me, despite the fact that we’ve been legally married in the U.S. since 2007.  U.S. immigration law, thanks to the Defense of Marriage Act (DOMA), does not recognize our union or our relationship.

I want desperately to be with Luis, and he wants to be with me. But we now spend months at a time with only Skype and international telephone calls to maintain our loving relationship. We’re missing out on so much of each others’ lives. I worry that such long periods apart will eventually strain our relationship. Long-distance relationships are not easy, and when we add to that the financial stress we’re dealing with now, my concern
is understandable.  Luis constantly reassures me that we’ll be fine, that we’ll get through this, but I worry, have nightmares, and lose sleep nonetheless.

At least I know that our situation is not unique.  There are at least 36,000 same-sex binational couples in which one partner is a U.S. citizen and the other is foreign. Many of those couples would very much like to live together as a family in the U.S. And while U.S. immigration policy is supposedly based on family unification, my family and the families of 36,000 other Americans are unable to avail ourselves of the family unification rules that opposite-sex couples enjoy.

It always surprises me when I bring up this issue with my LGBT friends in the U.S., and they have never considered this unfair situation we, the 36,000, face.  We are forced to choose between leaving the U.S. in order to be with the person we love, or living apart and trying to build a life together when thousands of miles separate us. And sometimes, personal circumstances like those that I now face leave us no choice. I cannot meet my responsibility to support my family in Mexico, and my family, Luis, cannot come to live with me in the U.S.

If Luis was a woman and my legal spouse, we could process the standard I-130 visa application and within a few months, be together.  I-130 is the form that allows a U.S. citizen to sponsor a spouse for permanent residency and eventual citizenship.

The crux of the problem is this: Marriage laws in the U.S. are at the state level, while immigration laws (as well as tax law, Social Security law, and hundreds of other laws) that involve marriage, are federal laws.  As long as DOMA prohibits the federal government from recognizing same-sex marriages like ours, Luis and I, along with the other 36,000, are excluded from the rights that most American citizens would enjoy if it so happened that they fell in love with someone from another country.

So, we have two options, neither of which looks very promising in the near-term.  We can
wait and hope that DOMA is either repealed or found unconstitutional at the Supreme Court level.  Or, option two; we can hope for passage of immigration legislation that will bypass DOMA and allow immigration authorities to recognize Luis and me as “permanent partners,” and thus grant Luis a residency visa.

The Republican-controlled House is working to ensure that DOMA remains the law of the land.  House Leaders have taken up the legal defense of the law after the Obama administration announced they would no longer defend the law on constitutional grounds. Legislative repeal of DOMA, absent a major political shift in the House and Senate, is even less likely than a favorable ruling from the conservative-dominated Supreme Court.  I
don’t have much confidence that we’ll see the end of DOMA any time soon.

The other option, changes to immigration law that would allow for recognition of our relationship (though not our marriage), seems an equally distant dream, despite that there are current proposals in congress that would achieve this.  The Uniting American Families Act(H.R. 1537) (UAFA), currently with 124 cosponsors in the House, would add three words to existing US immigration law – “or permanent partner” – wherever the word spouse appears. The Reuniting Families Act (H.R. 1796), currently with 78 House cosponsors, and the Uniting American Families Act (S. 821) with 22 Senate cosponsors, both include the UAFA language while being broader immigration reform bills. Unfortunately, none of these proposals will be voted on in the 112th Congress.

And so, we wait. We endure. We advocate for change (although sometimes, it seems we’re
howling at the wind). Attitudes are changing across America, with some polls now showing small majorities favoring the right of same-sex couples to marry. But there are still large numbers of Americans who vehemently oppose my demand for equal treatment under law. Our political and judicial system changes slowly, incrementally.  LGB (but not T) Americans now have the right and responsibility as citizens to serve openly in the military, and that’s a step forward. How much longer do Luis and I have to wait in order to be recognized, and be together in my country?

Help Luis and me to resume our lives together by calling your Representative and Ask him/her to sign on as a cosponsor of H.R. 1537 and H.R. 1796.  Call your Senators and
ask them to cosponsor S. 821. If they’ve already signed on, let them know you appreciate their support.  The Capitol switchboard number is (202)224-3121.  Alternatively, you can write to your elected representatives.  Here’s a website that provides excellent guidelines for communicating with members of congress: http://www.congress.org/congressorg/issues/basics/

Do it today.  Families are being torn apart every day that this situation continues. Thank you!

Paul Crist and Luis Tello

The Advocate magazine has a just-published article with more on the issue: “The Right to Love (and Immigrate) at: http://www.advocate.com/Print_Issue/Advance/At_Least_Obama_Believes_in_a_Right_to_Immigrate/

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Why the NAFTA-style Free Trade Agreement Will Fail to Benefit Colombia

Demonstrators oppose impunity for paramilitary massacres of trade unionists

Demonstrators oppose impunity for paramilitary massacres of trade unionists

Despite evidence of limited economic welfare benefits and significant social costs, Latin American countries have been signing and ratifying trade treaties with the United States since the early 1990s.  This week, the long-stalled treaties with Colombia and Panama were ratified by the U.S. congress and signed by the President.  Like other trade treaties,
these were based on the same template that has been the basis for U.S. trade policy since NAFTA.

In the case of the Colombia Free Trade Agreement (Colombia FTA), promises from the government of President Juan Manuel Santos to better protect trade unionists pressured enough reluctant Democrats to vote in favor of the agreement.  Over 4,000 trade unionists have been murdered in Colombia in the past 20 years, mostly by right-wing paramilitaries with links to the government, making Colombia the most dangerous country in the world to support collective bargaining rights. Colombian labor union leaders have rejected government claims that human rights and trade unionist protection has improved, denigrating symbolic gestures aimed at securing U.S. ratification of the  agreement, which they rightly claim will help multinational companies over Colombian workers.

In addition to doubts that the Colombian government will live up to its promises vis-à-vis the trade unionists, the gains from trade that Colombia can expect once the agreement is in force are ambiguous at best.  When the gains to some sectors (e.g. cut flowers, leather goods, seafood, textiles, certain services) are measured against the losses to other sectors (e.g. rice, corn, poultry, communications technology),  along with fiscal and regulatory costs associated with the treaty, the net benefits to Colombia come under serious question. The treaty may help to boost Colombian GDP by about 0.5%, but given the insecurity faced by trade unionists and the ownership and control structure of the economy (particularly in agriculture), there is no real hope that Colombian workers or small-scale farmers will benefit.

Besides harming workers and small-scale farmers, there are other costs to the Colombian economy that the multinational corporation-paid lobbyists do not discuss.  Under the agreement, Colombia will forego some $635 million in tariff revenue, will have to deregulate its financial sector, and reduce or eliminate programs that promote domestic-economy innovation and productive development.  In the global race to the bottom to attract these multinationals, who will make up that revenue loss to the Colombian government? Hint: it won’t be the multinationals benefiting from the deal.

So why do these countries sign these so-called “free trade” agreements? There are a number of factors.

Asymmetries in bargaining power are one reason Colombia, like other Latin American countries, sign up to do business with the U.S. Forty two percent of Colombia’s exports are currently destined for the U.S., and half of those exports come into the U.S. through special preference programs that were under threat if the government failed to agree to the treaty.  The U.S. boasts an economy 116 times larger than that of Colombia and an average income 17 times higher. Dependence on U.S. export markets, coupled with the threat of losing existing preferences if they balk, means that U.S. trade negotiators can make an offer that a country like Colombia cannot refuse.

Colombian trade negotiators also understand the time-critical nature of reaching a deal.  If Colombia fails to strike a deal covering, say, bananas, textiles, and tobacco, how long before one of its neighbors strikes a deal for those same products? The race is always on for access to U.S. markets. Under such circumstances, getting the best deal for long-term,
widely shared economic development is challenging.

But let’s be honest.  The Colombians didn’t want to refuse the deal put forward by the U.S. in the first place.  Like other Latin American countries that have signed trade treaties with
the U.S., there is a pervasiveness of neo-liberal economic thought throughout elite decision-making circles in Colombia. The deal was negotiated with right-wing political parties aligned with domestic exporters who share a commitment to neo-liberal economic policies, despite their poor record in the region. Negotiators may not have been able to refuse the deal, but they didn’t want to anyway.

These trade deals provide significant benefits to a highly concentrated handful of sectors, while the costs are borne by politically weak groups and/or dissipated across entire
populations and into the future.  That holds true both in the U.S., and in counterparty countries like Colombia. In the U.S., we’ve seen the negative effect of these deals on manufacturing and assembly, textiles, and other hard-hit sectors, while multinational and
financial elites have reaped enormous gains.  In Mexico, NAFTA devastated small-scale farmers unable to compete with subsidized agribusiness in corn and wheat that poured into Mexico from the U.S.  Many were driven from their land by loss of income, into cities and across the border in search of work.

NAFTA-style intellectual property rules make it impossible to put in place an innovation system for long-run development.  Many of the innovation policies that countries want the policy space to deploy are aimed at correcting for market failures so that firms and general welfare benefits can be created in the future. Thus, the beneficiaries of such policies are either weak or not yet in existence.

In case of any doubt that the U.S. has taken advantage of asymmetries in bargaining power and the triumph of neo-liberal orthodoxy among elite decision-makers in Colombia and elsewhere, one need only look to the failed negotiations for a Free Trade of the Americas deal.

Brazil, Latin America’s largest and most dynamic economy, enjoyed significantly greater
negotiating parity with the U.S. The center-left governments in Brazil have long been aligned with domestic industrialists and well-organized labor unions that depend on industrialization for jobs.  Brazil has long been less dependent on exports for economic growth, and never fully accepted the neo-liberal economic policies promoted from Washington.  Many in the economics profession and government hold what would be considered heterodox views. Consequently, Brazil broke off negotiations for a Free Trade Area of the Americas because leaders there understood that deregulating intellectual property, foreign investment, and financial services would significantly dampen growth prospects.

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Conceptual Frameworks, Language, and Messaging: Why Conservatives have dominated American public discourse, politics, and policy for a generation

This F^%*ing S&!t Ain't Logical

This F^%*ing S&!t Ain't Logical

The anger on the Tea Party right, and the frustration on the left that has energized the “Occupy” movement in cities across America, spring from similar,
mostly economic, dissatisfactions. The difference is that those on the rightght have been co-opted to a set of beliefs that are actually in opposition to their own economic interests. Those involved in the “Occupy” movement, and others on the left are quite clear about
where their interests lie, despite concerns by media pundits that the participants in the “Occupy” movement thus far lack a clear set of policy demands.

Voters from the right vote their aspirations, rather than their reality, while the policies
they support make it less likely that they (or their children) will ever achieve
the economic security and self reliance to which they aspire. Led to believe
that they could succeed if only government would get out of the way, they believe
in “personal freedom,” but lack an understanding of the nature of freedom as
defined by our Constitution.  They advocate an ideology of “personal responsibility,” rejecting the mutual responsibility required for social and national cohesion and willfully ignorant of the benefits they enjoy thanks to a social contract embodied by our government.

The right demands lower taxes and ever smaller, ever more impotent government,
focused narrowly on national security, administration of a harsh conception of justice
(largely punishment, meted out by a for-profit prison industry), and promotion
of the orderly but “unfettered” conduct of business.  Despite incongruity with a small-government ideology, social conservatives also demand strictly enforced restrictions on sexual conduct and family planning decision making. When consumers are sickened or
endangered by tainted food, industrial toxins, or unsafe vehicles, those who
hold this small-government ideology are as quick as anyone to ask, “Where was
the government? Why did they allow this to happen?” And, there is the classic,
from a Tea Party dominated town hall meeting in 2009, “Keep your government
hands off my Medicare!” Internal coherence of ideology and worldview is clearly
not a hallmark of conservative thinking for many on the right.

Vigorously implemented New Deal policies that reined in the excesses of market capitalism created a growing and economically secure American middle class between 1940 and 1960.  The introduction of a social safety net; government regulation of finance and industry; expansion of educational opportunity; expanded rights to organize workplaces and bargain collectively over wages, benefits, and workplace safety; progress on civil liberties and equal treatment under law; and broadly shared public service all contributed to an extended period of American economic growth and success.

Put simply, a prosperous middle class was built thanks to Progressive values that dominated American politics and policy for over three decades.  There was a broad commitment to a social contract in which everyone shared responsibility according to their capability. Since about 1980, government’s growing impotence in the face of budgetary and policy challenges from the increasingly-far right has strained the middle and
lower economic quintiles to the breaking point.

Conservatives, or more correctly called economic elites and those who believe in vain they
will one day join that rarified category, have long believed they are overtaxed
– they’ve been told repeatedly that they are, despite logical comparisons with
other advanced economies that are taxed at far higher rates. Before the
financial crisis of 2008 tanked the economy, driving up spending for automatic
stabilizers such as unemployment benefits, Medicaid, and child nutrition
programs, the US government budget stood at just over 15% of GDP, lower than at
any time since the early 1940’s, at the beginning of the period when the middle
class was created. That level is also the lowest of any wealthy country.  While we could debate the fairness of the tax system, whether it ought to be more or less progressive, etc., the gross numbers hardly indicate an overtaxed American populace.

The right claims that government is corrupt and unable to do anything well. There
is corruption, but it is corrupt because we’ve allowed the owners of capital and conservative corporate interests to have an outsize influence on policy and budgetary decision making.  Those interests are not aligned with the interests of middle class workers whose principal asset is their labor. Government doesn’t do a lot of things well because we’ve gutted it, privatized it, and turned it over to particular interests during the last three decades.  Agency and regulatory budgets have been slashed; and functions that ought not to be subject to the profit motive (e.g., environmental protection and regulatory oversight, worker protection oversight, even national defense and security) have been shifted to profit-seeking private contractors.  The effect of privatization and the outsize
influence afforded the owners of capital has skewed US trade and industrial
policies in ways that have devastated working families who grew up believing in
the American dream.

That dream can be revived, but until we reverse the course of the past thirty years, it will not be.  Unfortunately, our public discourse and policy remains mired in neoliberal ideology not far removed from that which prevailed prior to the Great Depression.  Change must come from a newly-inspired and reinvigorated political left, and start with fundamental change in the way we communicate Progressive morals, values, ideas, beliefs, and strategies.

How did ordinary working Americans become so devoted to an ideology that is in opposition to their own economic interests? 

Economic elites – the owners of capital as Adam Smith called them – have done a remarkable job of framing the national dialogue around the myth of “ordinary, self-reliant, hard working Americans, who owe their well-deserved success to personal virtues.” In fact, success for most depends on accidents of birth, and a reliance on the vast social, educational, and physical infrastructure that was built during the postwar years.  Sure,
there are exceptions, but a successful society cannot base rules and decisions on anecdotal evidence and exceptions.

Beginning in earnest in the early 1970’s, elite leaders began to develop and vigorously broadcast carefully crafted language aimed at framing public discourse and setting the terms of debate on public policies. They recognized, and capitalized on, widespread discontent that took root in the 1960’s, related to economic and social ills stemming from the war in Vietnam, unresolved racial inequalities, and a counter-reaction to the youthful rebelliousness of the 1960’s (which itself was in part a reaction against the social conformity of the 1950’s).

The left, conversely, failed to step up to meet the challenge of a resurgent right that had been eclipsed since the Great Depression. Rather than renewing their own message, framing the debate on their own terms and developing winning language and messaging based on a Progressive morals, values, ideas, and conceptual frameworks, the left adopted much of the language being heard from the right. The result has been disastrous for working Americans, for our national security, and indeed, for our prospects as a viable representative republic.

Words have both dictionary definitions and widely shared nuances of implication.  Take the word “revolt.” One dictionary definition is “to break away from or rise against constituted authority,” But the term also implies a population that is being ruled unfairly, or assumes that they are being ruled unfairly. And it creates mental images of people throwing off that unfair rule.  The idea of throwing off unfair rule is perceived as a good thing.

From the right, we hear the term “revolt” paired with “voter,” and “tax.”  Ordinary Americans, who identify as “voters” and “taxpayers,” thus begin to see themselves as the oppressed and the government as the oppressor.  If the voters “revolt” against incumbent elected leaders and taxation, everything will be good again.  This is language that promotes
anti-government ideology and reflexive anti-incumbent reaction. It sets up an adversarial relationship between ostensibly representative government and ordinary, taxpaying voters that both support and depend on a functioning government. “If we “throw all the bums out and elect new leaders who are ‘not Washington insiders,’ then things will get better,” goes the story.  Of course, it never quite works out because the money-in-politics system quickly co-opts even those elected with the best of intentions.  The inevitable result is political gridlock, divisive rhetoric, and electoral volatility that serve only to further confirm the inability of government to address the pressing problems we face as a society and nation.

In the conceptual framework of those on the right, taxes are tantamount to the theft of income earned by “good, disciplined, and self reliant” Americans. These confiscated resources are then used to support “the undisciplined, dependent, and undeserving.” Tax “relief” implies that taxes are an affliction to be overcome.  To oppose tax relief is to be the
villain. Consequently, the left, unwilling to play the villain, and unable to come up with a convincing counter-message, have been forced to adopt the anti-tax language of the right, and by doing so, right-wing anti-tax policies have followed at all levels of government.

What the left has failed to understand is that moral and value judgments are bound up with the implied meanings of the language used by the right. Progressives talk about policy, but fail to speak to the moral values of a large portion of the American public. By failing to speak to morals and values, we fail to set the terms of debate, and we fail to convince.

When Progressives talk about our policy positions, we use language provided by the right without considering the implications of how we are conveying our messages.  Examples include, but are not limited to, our language on the rights of women to make personal reproductive decisions; our advocacy for the right of LGBT Americans to live free of discrimination in employment, housing and marriage; and our call for humane policies for workers who cross borders without the proper documentation. Our language too often reflects a black-or-white, good-vs.-evil, with-us-or-against-us worldview, and an overly narrow focus on the rights and liberties of the individual, as opposed to collective rights, shared liberties, and a responsible approach to freedom.

“Pro-Choice” implies, for many, an immoral personal choice based on convenience and
expediency, juxtaposed against a righteous “pro-life” stance. To be “not-pro-life” implies being “pro-death,” or worse, “pro-murder.” “Pro-family” and “pro-child” convey a better message, but there are certainly many ways to effectively convey the values that underlie our policy preferences on this issue.

“LGBT rights” separate LGBT Americans, allowing opponents to claim that demands for equal treatment are really some special set of considerations not afforded to others or infringing on the rights and freedoms of those who hold differing values. When we respond to charges from the right that LGBT rights infringe the rights of religious and social conservatives, we respond poorly, failing to adequately articulate why such claims are false and irrelevant, with arguments based on widely shared values. This, too, is a failure of language and message that needs more attention, research, and a coordinated effort to ensure that the LGBT leaders use a consistent and values-based message in all public discourse on the topic.

Shockingly, we even hear self-described Progressives in politics and the media referring to
undocumented workers as “illegal” (can a person be illegal?) and “alien” (a dangerous “other” that threatens the prerogatives of “people like us”). The terminology has been so oft-repeated that it is used without considering the hateful connotations it carries and how it strengthens conceptual frameworks of racism, blame, and social division. This has to stop, because Latinos and people of color are paying for this language with their very lives.

But, what are “conceptual frameworks,” and how do they relate to language and messaging on ideology, policy, and issues? We all carry conceptual frameworks. They are our way of interpreting reality and the world around us.

It is not uncommon for an individual to carry conflicting conceptual frameworks on the same issue. A simple way of thinking about conflicting conceptual framework might be illustrated by the oft-heard response, “I see your point, but…”  Such a response indicates the existence of two, conflicting conceptual frameworks in the mind of the listener, one being dominant.  One or the other of these conceptual frameworks can be strengthened or weakened by the messages we hear, and by how frequently we hear them.

The aim of effective messaging is to strengthen or weaken our existing conceptual frameworks, thus winning supporters to the policy preferences of the messenger. Winning over those whose dominant conceptual framework reflects that of the messenger is relatively easy. It’s like preaching to a choir whose faith is heightened by hearing the sermon every Sunday. The real goal and the real challenge of effective messaging is the strengthening of the desired conceptual framework among those who are conflicted and/or frustrated with the status quo, be it economic, social, or religious. Frustrated, angry, and conflicted people are understandably susceptible to manipulation of their conceptual frameworks if the messaging resonates with their values and provides them with an explanation (often, blame) and a solution to their plight. It is at moments of great social change that language and messaging can be most effective at altering the conceptual frameworks of large numbers of people.

Language and messaging, it should be noted, are not be confused with facts, which have been shown to be ineffective at changing a strongly held conceptual framework.   Conceptual frameworks are strengthened or weakened based on how effectively the implications and nuances embedded in language resonate with deeply held core values. Facts can be dismissed as biased, untrue, or irrelevant, while effective messages connect with our core values and either strengthen or weaken related conceptual frameworks, which in turn determine how the individual perceives reality. Changes in conceptual frameworks, rather than presentation of facts, most often induce changes in our opinions and positions on issues.

The right’s success in framing the national dialogue in terms that alienate Americans from the idea of a social contract involves more than just coming up with the right buzz words that speak to our values, of course. Conservatives have done an outstanding job of getting their messages out consistently. Getting the message out requires that the terms of debate are repeated, endlessly, by people and institutions that appear credible and thus deserve respect. Developing those spokespersons and institutions requires sustained and substantial investment in long-term assets. It takes money, lots of it.

Economic elites and social conservatives have invested many billions of dollars, over decades, researching language and developing messages that strengthen the conceptual frameworks that support a conservative worldview. They have long understood the value of both messaging and the need to repeat it in the public square relentlessly. To that end, they have established conservative think tanks, and encouraged like-minded wealthy individuals to endow professorships at prestigious universities.  They have invested in media outlets dedicated to disseminating the conservative message.  Forty years of investment have yielded an overwhelmingly conservative message dominating talk radio, cable news, print publications, and online information sources.

These investments have created an “army of the right,” constantly updating and honing anti-government, anti-tax, anti-labor, anti-immigrant, and subtle anti-minority messages, reinforcing the conceptual frameworks of an overstressed polity, ensuring that conservative ideas dominate the national political discourse, and crowding out Progressive messages that are less well articulated.  The right understands the long-term value of investing and they have done an outstanding job of building the infrastructure necessary to preserve and defend their interests.

And while the right invests in long-term institutional infrastructure, the left gives money to grassroots organizations and demands that it all go “to the cause,” or to elect leaders that later disappoint.  The left’s causes are about helping people in need, nurturing, and taking responsibility for the well-being of others.  Money spent on administration, communications infrastructure, and career development for progressive leaders is a diversion of resources intended to provide for immediate needs of the vulnerable and disadvantaged.

Conservatives see “good” people as those who have already become wealthy “through  personal discipline and self reliance,” or who see themselves as disciplined and self reliant, and thus capable of someday acquiring wealth.  Their messaging reinforces that conceptual framework. Progressives see this stereotype of the “independent, self-made man” as a flawed perception of the self struggling in opposition to a decadent and indolent society.

The conservative worldview says that “helping” spoils people, gives them things they have not earned (e.g. “entitlements” such as Social Security, Medicare, Medicaid, and unemployment benefits – “entitlement” implying something to which one feels entitled, but in fact doesn’t deserve).  “Helping” results in dependency and lack of discipline in this worldview.  We naturally like to take credit for our successes, so messaging that reinforces an independent and self-reliant worldview, together with the investment required to relentlessly broadcast it, explains why conservatives have succeeded at dominating our public discourse and policy direction.

In order to reframe public discourse in ways that benefit ordinary workers and vulnerable communities, we need to find a fundamentally different linguistic and conceptual framework to talk about taxes, the role of government, and what it means to be a member of an interdependent society.  We need to develop messages that strengthen a collective conceptual framework of mutual responsibility, community, and shared freedom and liberty. We need to move away from a narrow focus on the rights of the individual (that’s the language of the right). We need to frame government as the essential institution through which we pursue shared goals and aspirations. We need to explain why progressive and fair taxation is an indispensable element of patriotism. Progressives need to learn and become comfortable articulating the language of morals, values, and ideas, and then frame our policy prescriptions as the way we achieve our vision of a just society and unified nation.

Reframing public discourse is a long-term project.  The right began investing in the  infrastructure needed to frame public debate in the 1970’s.  By 1980, they had Ronald Reagan, who was able to use that infrastructure to win the presidency. And they have dominated our public discourse, our public policies, and our political system ever since. The left must to begin to invest in the same sorts of infrastructure that the right has been building for decades.  That won’t be an easy transition, given the short-sighted accountability demands we place on our political and nonprofit institutions, but it must be done.

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The U.S. Postal System Crisis: Product of Conservative “Reform”

 

Hands Off My Post Office

Today, the postal unions representing America’s postal workers is organizing a nationwide “Day of Action” to save the US Postal Service (USPS). National news media have reported extensively on the budget crisis facing the USPS, but has done a typically abysmal job of explaining why the crisis exists. These are the facts…

Republicans, with the support of the Postmaster, are demanding service cuts and layoffs due to the U.S. Postal Service’s (USPS) inability to fund $5.5 billion due on September 30 to its federal retiree health fund. The expected 100,000 layoffs, in addition to exacerbating an already grim unemployment picture in the U.S., will hit African-Americans and veterans particularly hard – two groups that already have much higher unemployment rates than the national average. But apart from the employment issue, we need to be asking why the USPS is in such dire straits in the first place.

The biggest budget problem by far facing the USPS is the mandate placed on it by an outgoing Republican congress in 2006, requiring USPS to pre-fund, over a decade, its employee pensions for 75 years. The USPS is among a handful of employers still offering a defined benefit pension plan that provides real security to retirees after a lifetime of work. The pre-funding requirement, never asked for by the postal unions, was and remains a poison pill for a federally run postal delivery service. No other pension plan, either public or private, is required to pre-fund pension obligations for 75 years into the future in order to be considered solvent. Without this burden, the USPS would be in the black today. The cost of pre-funding has exceeded $20 billion over the past 4 years – an amount that about equals USPS losses for the period.

There are a number of ways to solve the budget crisis in the postal service, but certainly the continued pre-funding required under the 2006 postal reform law should be curtailed. It is unreasonable. But even barring this, there are other options. The Inspector General has determined that USPS overpaid into a number of other funds – between $50 and $120 billion! Those funds could be redirected to the USPS pension fund, allowing it to meet the extreme pre-funding mandate. That, of course, would require commonsense action by a current congress in thrall to Tea Party conservatives bent on decimating government services, including the delivery of mail.

The shuttering of 4,000 mostly rural Post Offices and proposed reduction of service will create real hardship for small-town residents across America. Unlike FedEx and UPS, the USPS has a mandate to serve every American, wherever they live. The private delivery services do not have to deliver to rural regions where it is not profitable, unlike the USPS. In fact, the private companies use the USPS to deliver to some rural areas, because it is cheaper for them to pay the Post Office than to deliver to these areas themselves. Clearly, the private sector will not rush in to provide service when the USPS pulls up stakes in small-town America.

Republican calls for the USPS to “operate like a private business” is undermined by the pre-funding mandate they forced on the agency in 2006, and is unreasonable given the longstanding and laudable USPS mandate to serve all Americans regardless of where they live. Instead of calling for layoffs, reductions in service, and the shuttering of thousands of Post Offices, we ought to be talking about repealing the pre-funding requirement and even subsidizing the Post Office for providing the public good of rural delivery to areas that the private sector find unprofitable to serve.

The current USPS crisis is a wholly manufactured one brought on by conservatives who have wanted to bring down the USPS for decades, allowing private companies to pick up the profitable parts of the service while leaving the rest. We must not let that happen.

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