– So we're now on the, into the fifth part of the course called, what is to be done? And I want to just begin by talking about the key features of the
politics of insecurity, some of which we addressed
earlier in the course and some in the last two lectures. But they really shape
the landscape on which we have to think about,
what can and cannot be done in politics, in
the world as we actually find it. And so, first thinking about voters. One thing that we have learned is that local inequalities matter
to people much more than global inequalities. Bernie Sanders can talk
as much as he likes about the top 1% and it will motivate activists on the left of the Democratic party but most voters really
care about much more local inequalities.
And we talked about this
earlier in the course when we were talking
about how capuchin monkey experiment was misinterpreted when the angry monkey was likened to
the Wall Street protester but whether the monkey was
angry because she or he was not getting something
that a similarly situated monkey was getting. The monkey was not troubled
that the researcher had a big bowl of grapes and cucumbers. So people tend to compare
themselves to similarly situated others. Oil workers might compare
themselves to coal miners. Auto workers might compare themselves to steel workers. And this is true up and
down the occupational scale. I think I mentioned to you, a professor would be much more troubled to learn that she or he is paid significantly less than say, $10,000 less than
a professor in the next office than to learn
they're paid half a million dollars less than the attorney next door.
So people tend to make local comparisons. And the idea that marked hope for, that people would start
to make more global comparisons, is not
supported by the research of sociologists and social psychologists. Secondly, think about
Rick Santelli's rant, another illustration of this point. This is the famous rant
on the Chicago Mercantile Exchange right after
the Obama Administration came into office and had
started talking about minor mortgage relief for homeowners. Nothing like John
Geanakoplos was proposing, but nonetheless he was proposing reducing interest rates at least
for a time on peoples loans and it produced a lot of
rage that was articulated in that video I showed you. At the end of it, his
calling for a tea party and people credit the formation
of the tea party with… As being, if you like,
catalyzed by Rick Santelli's rant on the Chicago Mercantile Exchange.
And you might also recall
that one of the things he complained about was, he
said, it's a moral hazard. It's a moral hazard. But notice of course,
bailing out the banks is also a moral hazard, right? Bailing out the banks is
giving banks the incentive to gamble with taxpayer's money. So while it may be a
moral hazard to bail out the homeowner's, it's
no less, you might say in some ways it's more
consequential moral hazard to bail out the banks. Nonetheless, what enraged him was that do you wanna pay for your
neighbor's mortgage?, he rhetorically said. So again, local comparisons
that matter to people. Think about the difference
between the Trump and Sander's campaigns on this question of who people compare themselves with. In many ways Trump and
Sanders ran a populist campaigns in the 2016 election. They attacked Wall Street
elites for being corrupt. But a difference was that Sanders talked a lot about inequality
whereas Trump did not. Trump never promised to reduce inequality. He never, as I said, even said what Ronald Reagan had said, that he wants America to be a country in which everybody can get rich.
All he said was that, you
people have been screwed. You people have been… Left behind by the… By the policies of foolish elites, he calls everybody idiots. And I'm gonna put America first and so on. And to the extent there
was a fairness argument. We talked about this in connection with Arlie Hochschild's
narrative of cutting in. Some people have cut in front of me and taken something that I would otherwise have gotten, right? Again, very local comparisons that people are making.
They are not thinking about what people, very distant from them
in the socioeconomic order are making. Related to that, closely related to that is a loss aversion and in its insecurity, often matter much more to
people than inequality. Again, think here of Trump's
make America great again. Something's been taken away from you. We're gonna bring it
back and do something. We're gonna recreate something
that had existed before. I am gonna bring back those jobs. I'm not gonna make you rich. I'm gonna bring back those jobs. That was the essence of his campaign whereas Hilary's was, she
took that other Reagan line, American's best days are ahead. Sunny optimism which is
a lot harder to sustain during an era of endemic
employment insecurity. And again, just driving
home the point that it's insecurity and the
fear of downward mobility that matters much more to
people than their place in the distribution of income and wealth, globally conceived.
Remember those data about
Trump primary voters. Only a third of whom earned
lower than the median income, below $50,000 a head per family. Another, 2nd and 3rd earned
between the median income and 100,000, and the third
third of primary voters not Republican voters
in the general election were Trump supporters. And in those primaries, so, again, middle-class people who feel insecure, and this is, what Dan
Markovits' book is about, may be just as anxious and mobilizable by a populist politician as poor people who feel insecure.
So the insecurity and
loss aversion matter more than inequality and
it's local inequalities that matter much more to
people than global ones. And then we're living in a world in which almost everywhere
organized labor is weaker than it's been in decades. We've seen, in country after country, the decline of union
movements, it's way down into single digits, in the US, and the majority of workers that are organized now are in public sector unions which do have some political clout. We will see next week when
we talk about education. But for the most part,
as a force in politics, unions have seldom been as weak, if ever, in the last 80 or 90 years, if ever, as they are today. This is particularly pronounced in the US, but we saw pretty much everywhere except one or two places like
Finland and Iceland, we've seen a decline in the
power of organized labor.
A concomitant to that, business interests are stronger than
they've been for decades. Partly because of the
collapse of a serious alternative out there. Communism to the extent
it exists politically is now supported by capitalists economies in places like China and
Vietnam and so there's no real alternative to
capitalism out there, which obviously, greatly,
increases the power of capital. Particularly in an era of globalization when it can easily flee, the flying East theory that Christina talked about in the China lecture. And in these, as jobs going
increasingly to technology, capital doesn't even need to flee in order to increase its leverage over labor. So we're living in a world in which labor is weaker than its been in living memory and business interests are more powerful than they've been in living memory. And then coming to Thursdays lecture of last week, we're also living in a world in which political
parties have become weaker and more fragmented just about everywhere.
And this is not something that has gone on for eight decades, but it certainly has gone on over the past
four decades as labor has become weaker, parties on the left have fragmented and we saw that as induced fragmentation on the right in multi-party systems and
all over the democratic world, this impulse to
democratize parties, to get more and more direct democracy in the governance of parties, and in making of decisions has greatly weakened parties in both multi-party systems and even two-party systems and indeed, even the… The platonic form of what used to be two-party systems. The Westminster system between their going for referendum between the changes in their leadership selection rules, between adopting things
like fixed parliaments and candidate selection
also being decentralized, they have replicated much of the rest of the democratic world in
making it much more difficult for parties to present, get elected on programmatic platforms
and then implement them as governments.
It's a world that's ripe
for populist charlatans who exploit insecurity and
promise snake oil solutions. So, what is to be done? Now at the beginning of the course when I prefaced some of these themes, in the first few lectures, I also said don't get too depressed. (class laughing) And in many respects, this
is a depressing prospect. But what I want to be arguing in these last lectures is that,
certainly we shouldn't give up hope and there
are ways of thinking constructively about
politics going forward. And indeed, in some
respects, there are reasons not just for hope but even some optimism. This was a distinction
Martin Luther King made towards the end of his life. He said he was no longer optimistic but he hadn't given up hope. I think there are some reasons to think that it might be possible to come up with constructive change and
build regressive support for it to happen.
And so that's where we're
headed in these final lectures. So, a central message of this final part of the course, and if
you like, presupposition of much that I'm gonna
say to you, power phrasing Immanuel Kant is that,
policy without politics is empty, but politics
with policy is blind. Policy, politics without policy is empty and politics without policy is blind. So, let me emphasize that it's not just in the real world but in
the academic literature, for the most part, people who study policy don't think very much about politics. They think about what
policies would be good, what should happen. But they have relatively little to say about how they're gonna get it to happen. Whereas people who study politics tend to explain why what happens happens but have way little to say
about what should happen.
And so there's this sort of
divergence of preoccupations. But I think that that is misguided. That we really need to think about what's desirable in the context
of what's feasible and take into account the constraints and possibilities that might be offered for thinking about policy rather than thinking about it in a vacuum. So just to give a couple of illustrations of policy without politics. Perhaps the most influential
book of political economy written in the last couple of decades is Piketty's Capital in the 21st Century. This is the book in which he argues that the reason for increasing inequality is that returns to capital exceed returns to the other factors of production. And so, wealth accumulates over time at the top. Economists debate his data and some ways of measuring this but
that's not my concern here. The other one I wanna just mention to you as examples of these brilliant economists, there's no question about
that, but the things that he says about politics are… Bereft if any serious attention as to how they might be enacted. So for example, in his
book published in 2014, in the penultimate chapter of that book, he calls for aggressive
tax on global capital.
And in the beginning of that chapter he does say, well this
might be a utopian idea. But we should still put it out there for thinking about where we want to get to and besides, it could
inform more realistic proposals like a
Europe-wide tax on capital. Now you might say, well in 2014, that wasn't, you know,
it might not have seemed a naive thing to say,
as naive a thing to say as it is today, but nonetheless, in 2018 he has pushed this
idea further with some other intellectuals in Europe, publishing what they call our Manifesto
for the Democratization of Europe, and you can
find it and peruse it at your leisure on their website.
They're calling for the creation of a new European assembly that would essentially function as a European-wide parliament that would have powers to raise revenue and manage budgets and it would be… The idea is that 80% of the legislators would be elected in the national elections so when you vote for your MP in the UK or Austria, they would
also, not only would they go to the British or Austrian parliament, they would also participate in this new European assembly. 80% of them would come there. The others would come from
the European parliament by proportional allocation. And they portray this as an alternative to the current EU structures
which are so constrained by the treaty-based character
of the European union which I lectured to you
about some months ago. But what do they ignore in proposing this? Why is it that the Lisbon Treaty ended up with a treaty-based system? It was because the more
ambitious proposals envisaged at Maastricht
were roundly rejected in referendums in Europe.
And so they had to
actually cancel a number of the plan referendums
because they saw the whole project of a never closer
union heading for catastrophe. And so they retreated. The Lisbon Treaty is really a retreat back to the idea that while EU is essentially a system of intergovernmental treaties in its ultimate legitimacy. They also argue that the purpose of this new European parliament is to do things like reduce inequality within the member countries. But why, if the member
countries in their own parliaments can't reduce inequality, why would anyone think
that sending them to a European parliament would enable them to reduce inequality any more effectively? So, and if you go and read the website that they have there,
which I urge you to do. It's certainly an
imaginative and interesting proposal in an intellectual sense, you will find the thing I said you should always be careful of.
Or should make you watch your wallet. The vast majority of it is written in a passive voice. The vast majority of it said
about what should happen. What should occur. What needs to happen. But of course, we can
talk until we're blue in the face about what needs to happen without having anything
to say about how to make it happen. What will be the political
forces that are gonna produce an outcome of this kind? And when you think back to the literature on the European Union, Tony Judt published his book in 2006,
post-war, when he warned. He said, the problem
with the European Union is that it's been an elite
project from beginning until end and as soon as
it gets into any trouble the popular resentment
of European-wide politics is going to erupt and it's
not gonna be pretty to see.
He turned out to be right about that. Adam Tooze in Crash
gives chapter and verse of the inability of the
European governing structures to come up with policies
that the populations in the constituent
countries will live with. And so, the nationalists of the countries within the European Union is very powerful in the idea that it's going
to go away anytime soon, I think is implausible. And I gave you a reason, if you think back to my lecture. Among the reasons is that the Europeans have contracted out their security to NATO over these past several decades whereas in the American case, what
built a sense of national purpose when we transitioned
from the Confederacy to the Constitution was the
creation of a National Defense and the funding of
Central National Defense. And then the idea that
people would identify with the national project rather than, what we might call the federal project, rather than the states,
that was a transition that was set in motion
by the centralization of our power over national security in the American system at the
time of the Constitution. There's never been an analog of that and so the idea of an ever closer union has largely been a fantasy
of elites for which popular support has never been dealt and indeed is less likely
to be forthcoming today than it has been since anytime since the financial crisis.
So the idea that we can
now create a new European parliament that, as they argue in cases of disagreement would
actually trump the decisions of the European Union
who which are constrained by the treaty-based
caricature that strengthens national parliament I think is, it's an example of policy without politics being ultimately empty. What about politics without policy? Well we have examples of that. Just to give one here. (drum music) (crowd chanting) – [All] Occupy Wall
Street all day, all week. Occupy Wall Street. – It's our duty as Americans to fight for our country and to keep it, you know, true to serving its people. And when it doesn't do that, it's immoral not to stand
up and say something. – I'm here myself as a free individual to humanize the markets and to have true participatory democracy.
Bottom up democracy. And to make Wall Street hear the sound of what democracy means. – What kind of power? – [All] People power. – Wall Street, it crashes, and you know, people start, people lose their jobs and things like that. We're very angry at Wall Street. It's a part of capitalism,
American capitalism especially, that's why we're here today… At Wall Street. – There's no reason to not be peaceful. We just wanna get a point across. We're just trying to let people know what's going on and why we're here for it.
– One in seven children
in the United States suffer from hunger, at
the same time we're giving billions and almost
trillions to Wall Street just for bailouts. Something needs to change. We need an economy for the people and by the people. Not by the rich and for the rich. – I mean, and the
government's doing the work for us, all they have
to do is cut some more people's insurance, unemployment benefits and it won't be a bunch
of 20-year old white college students out here, you know? – What would make today a success? What kinds of changes
would you like to see as a result of everyone
demonstrating today? – A success, it's already happening.
They corral the bull. And that's pretty much a
huge symbolic statement. – So there you have it. This is the beginning of
the Occupy Wall Street Movement. It was a movement that
was famously uninterested in articulating particular policies, in organizing itself behind
any particular agenda, but rather its purpose was to express this moral outrage at the
bailing out of the financial crisis and the inability
of the Obama Administration to do much else. They were to some extent triggered by the Arab Spring Movement
which had gotten going that year. But they really didn't advocate
any particular policies. And indeed if you think about… If you think about the
decision to occupy Wall Street, it was, you know, unlike,
at least the Vietnam protesters went to
Washington where something might be done about it. Whereas, here they went to New York and then spent the following Fall on many town and village greens around the country but because they lacked
organization or leadership or resources, once the cold weather came, they soon faded away. Now, this doesn't mean
that they were irrelevant to American politics. They articulated a moral
narrative that was, that had a certain kind
of coherence to it.
You might call it a
reactive moral narrative but I'm gonna have some more to say about the importance of moral narratives in effective distributed
politics later this morning. But they had nothing else. They had nothing more
than a moral narrative. And moral narratives on
their own is not enough. Again, this is politics without policy. So my agenda today is to get us to start thinking about
how, we can think about how there can be effective
policies in light of what we do know about politics. And one phrase that falls to mind is in one of John Rawls's less famous writings, his Law of Peoples it comes from, I believe, the way he first used it, this is the idea of Realistic Utopianism. And so, the thing about being a realist, about politics, in the real
politics sense of realist it is the danger of being
a realist is it might prevent you from trying
to do things that will change reality, right? That you'll be so constrained by one sense of the politic, you know, the politics is the art of the possible. You'll be so constrained by the notion of what's possible that you won't push for policies that might
change what's possible, right? So that…
I think we actually say in our book on the Death by a Thousand Cuts that real political creativity gets people to think that what they
had previously regarded as impossible is in fact possible, right? That's, you know, you wanna use the buzz words. You wanna push the envelope. Think outside the box. You've heard them all before. And if you're very
constrained in your thinking about what appears to be feasible in politics as we know
it today, you will not push to change the boundaries of what is possible in politics today. And so you run a risk
of being, if you like, captive of the inability
to think imaginatively about ways to change what is possible.
And so I like this phrase
realistic utopianism in that, it conjures up the idea of trying to get to a better
place but thinking about the steps from here to there. You've gotta think about
how you're gonna join the dots. How you're gonna in fact get policies adopted that might change the politics on the ground, which I think
is conspicuously missing in the proposal for European parliament that we just talked about. And so to make that case, what I'm gonna do today and then I'm gonna use this framework in
our remaining lectures is talk about what I'm gonna
call building blocks of effective distributive politics. And there are six of them. And I'm gonna spend a little bit of time on each of them.
And I will start with coalitions. Very important in politics
to think about coalitions. And the reason it's
very important politics to think about coalitions
goes back to our discussion of the differences between
the median voter story and the majority rule divide
the dollar game, right? So just to remind you,
the median voter story created the expectation that
because the median voter is always below the mean
voter, there would be downwardly distribution of wealth because politicians in search
of the median voter would advocate policies that the
median voter would prefer.
And that was the fear of
19th century liberals. It was the hope of Marx in his later years when he started talking
about the parliamentary road to socialism and it's embodied in the median voter theorem. The puzzle was that it doesn't happen in any kind of systematic way. And we thought one
reason for that might be that there's another
dimension such as race that people care about more. And we talked about
Nixon's southern strategy in connection with all of that. But then we talked about
the majority rule divide.
A dollar game where we saw even without the 2nd dimension any distribution of income can be upset by majority rule. All you need is three
people and you're off to the races with the potential, right? So another way of putting
it is that the median voter theorem assumes
that all of these people are gonna vote together. But in fact, you might
get a coalition between the rich and the poor
against the middle class. So you might get all kinds of coalitions. And that means that no… No distribution of income and wealth is not potentially vulnerable to being upset by majority rule. And an example of this, we spent some time on early in the course, was the campaign to repeal the estate tax
which is just about money. It was just one divisible good. And so, that's clearly not the case that a 2nd dimension or anything like that producing the instability. So, coalitions are really important. You have to think about what coalitions are going to support, what it is that you're trying to achieve,
and you've gotta think about them, both inside the legislature and outside of the legislature.
So if you're thinking
about how to actually get a bill enacted in Congress,
you have to not only think about, you know,
who is gonna buy off who? What deals are gonna be
made to get this bill to parliament or through Congress? You're gonna have to think about building support out there
in the country for it. Because there are many, many things that politicians are planning to consider but in the American case,
for example, the rule of thumb is if you're bill does not get into the top eight,
which means it will be known as HR1-2-3-4-5-6-7 or eight, it's not going to actually
make it to the floor.
It's not going to be voted on. How do you get a bill up there? We saw, again, with the bill to repeal the estate tax that it
took building support outside of the beltway. Not just inside of the beltway, to get many politicians to become cosponsors of that bill and see
it is in their interest to support it. So you have to think
about coalitions inside the legislature and
outside the legislature. If you think about the
abolition of the slave trade. Again, people like this
begins in, it's a story that begins in Britain, people
like William Wilberforce build a coalition in
the British parliament of so called Dissenting
Whigs, the Dissenters. And just by chance, this is when, this is before the hay
day of strong parties in Britain.
They still had multi-member districts so they had much weaker parties. And it so happened that,
it behaved much more like a European system and it so happened that the Dissenting Whigs, for about five consecutive elections, in
the mid, between the mid 1830s and the 1860s, the Whigs held the balance of power and were
able, since the Dissenters held the balance of power
and because they cared more about that than anything else, they made a condition of
supporting governments. Even Whig governments. Even governments that
supported other things that they wanted. They cared so much about this, that they were able to put
it through the legislature.
But they also built support for outside the legislature. They threw various anti-slavery societies. And indeed, after William
Wilberforce left parliament, he spent the rest of his life pressing the course
outside of the legislature. So, you really have to think about building support inside the
legislature and outside. A second thing you have to do is not only think about enabling
coalitions, but you have to think about the blocking coalitions. If you're gonna try and enact a policy, who's gonna try and stop it? And what are they gonna do? Because, you know, your coalition is not gonna prevail if this ineffective blocking coalition.
Again, we saw, in the
repeal of the estate tax, very clever use of enabling conditions, and very good strategic anticipation of how to head off potential
blocking coalitions. And so we saw, for example, they got the congressional black caucus to support repeal of the estate tax on the grounds that it would protect small business and particularly in African-American communities, and they got
people like Bob Johnson to support it. Black Entertainment Television on the grounds that the first generations of wealthy African-Americans shouldn't have their, save their accumulations tax away. They got the support of gay groups on the grounds that estate tax discriminates against gay people. At that time, there was no provision for gay marriage.
Of course, it was not the estate tax that discriminated against gay people, it was the law of marriage
that discriminated against gay people, but it didn't matter. They got Frank Blethen, a liberal owner of the Seattle Times, to get family owned newspapers to support it, because they were worried about the Gannett and other big multi-national news organizations gobbling them up. They got the pharmacists to support it so that they could get
it through the senate. they got small business to support it so they could get it through the house. Very clever use of all of these groups. And then when they thought the potential blocking coalitions, the life insurance industry, estate planning, life insurance, the non-profits benefit
from the tax deductions that people make in order
to protect themselves from estate taxes.
And they thought about
unions who generally fight. And they came up with
a separate strategy for managing every one of
these potential blockers. And so, they managed to thread the needle in that way. If you think about, if you think about the abolition of the slave trade. They very cleverly, in order to head off potential blocking coalition, avoided the question of slavery itself, and began first with the abolition of the slave trade in the North Atlantic. And so here, if you think about the different coalitional possibilities, they change greatly. Because if you're talking about abolishing the slave trade, it did not prevent the
cotton manufacturers in Manchester from getting cheap cotton that came from the American South.
It did not prevent the
Americans supporting after 1808 when it was possible to abolish the slave trade. In fact, part of the reason you couldn't have enforced the abolition
of the slave trade without the Americans, and the reasons the Americans supported it are not very morally appealing. There was a racist sense that they didn't want a great increase in the African-American
population of the US And in the American South, it was essentially protection.
There was a domestic slave trade that they were interested
in protecting at the time. So, it was possible to
put together a coalition of strange bedfellows, if you like, to get rid of the North
Atlantic slave trade. And they left the
battling of slavery itself to another day. So, again. It was possible to put together the coalition and head off potential blocking coalitions by thinking in those kinds of strategic ways. A third feature of thinking about coalitions is that, hugely important to pay attention to business interests. This has always been important. When we talked about, we talked about the new deal. While it is true, and I even showed you the I welcome the hatred video on the second new deal that Roosevelt ran on when he was running for reelection. As my colleague, Peter Swenson and others have documented that most significant expansions in welfare states have come about with at least tacit and sometimes active support
from business interests.
And if you think that was true then, in the world we're living in today that I described to you over the lectures in this course, when business interests are in a position of unparalleled power politically, if you're going to try to enact policies that affect business interests, you better think about how they're going to respond. Now, that doesn't mean
you should necessarily kowtow to business interests. But you need to think about, will they be an enabling coalition? Will they be a blocking coalition? Is it possible to divide
business interests so that some business
interests are working across purposes with
other business interests? But in this point of the 21st century, the idea that in any capitalist democracy, anybody is going to enact policies that affect business interests in a serious way without contending with business interests is a fantasy.
It's not going to be possible. And so you have to think about how business interests are going to be a factor in whatever it is that you're trying to do
or trying to forestall. So, for all of these reasons, some analytical, some empirical, you have to think about coalitions. The median voter is not gonna be enough. Secondly, moral narratives. As I said, when we talked
about occupy Wall street, moral narratives matter in politics. Why do they matter? One reason is implicit in what we've already talked about. The very fact that purely interest-based coalitions are inherently unstable. We know that from the majority rule divided all again means that something else has gotta hold them together. If all you're gonna do is say… We'll make a deal where you get the biggest possible slice, somebody else will come along and
offer you a bigger slice.
And so, you have to think about, well, what is it that will get people to resist when that somebody comes along and tries to recruit you
to a blocking coalition? The story I told you when we did the estate tax class was that when the democrats finally figured out what was going on, they came and tried to hive off the farmers. They're said, we'll give an immediate, remember this? We'll give an immediate
exemption to farmers. And they had a huge fight during the subsequent meetings
of the repeal coalition because the farmers were
actually being offered a better deal by the democrats,
the permanent repeal, than the bill was gonna give them, which was gonna be this
weird 10 year repeal. But they said things when
you interviewed them. They sounded like abortion activists. They said, how could I
look myself in the mirror? How could I tell my child that I had been bought off? This is a moral crusade, it's
an unjust tax, and so on. If you want another
example, many years ago I had a call from an academic colleague, a philosopher who said they were starting a new party, it was gonna
be called the New Party.
(students laughing) And would I support it? And I said, well, okay,
what is the New Party all about? And they said, we want
it to be an equivalent counterbalance on the left to what the moral majority is on the right. This is the era of the moral majority. Which, moral majority
is sort of predecessor, if you like, to the tea party. And I said, well, good luck, goodbye, I hope you do well with it. And of course, there's a reason why nobody here has
heard of the New Party. because being a
counterbalance to the moral majority is not a
compelling moral narrative. The people in the moral
majority believe in something. That's why they're there. They're willing to internalize costs. They're willing to stay up.
They're willing to go to meetings. They're willing to do something because they believe in the cause. Right? And so, the idea that you can have, that you can have people join a coalition who don't actually believe in the cause isn't gonna be enough when people come along trying to split your coalition. When George W Bush in
2005 sought to privatize social security, I'll have more to say about that in a little while, but one of the things he ran into was, he couldn't split the coalition. They tried by saying the new system will not apply to people… I think they tried 55, and then they tried 50, under the age of
55, under the age of 50. And they found that public opinion among the elderly didn't move a millimeter.
So, what did this reflect? It reflected the fact that elderly people didn't just care
about social security for themselves, but for their children and grandchildren. And so they weren't
sufficiently self-interested to be peeled off in that way. They were committed to the idea that this was gonna be
important to be there for future generations. Again, they couldn't be bought off just on the basis of their self-interest. So, an effective movement
is almost certainly going to require moral narratives that cause people to resist being picked off by some blocking coalition. And gonna motivate them to do the work. To show up at meetings,
to do the leafletting, to do the donkey work of moving a movement forward. Notice it need not be
the same moral narrative for everybody. If you look again, go back to the case of the abolition of the slave trade. I keep coming back to the slave trade, it's a very interesting example because an economist, if there had been neoclassical economists around at the beginning of the 19th century, they would have said it'd be impossible to abolish the slave trade.
The race to the bottom,
all the usual reasons would have been given. So, I think it's a great
example of realistic utopianism, that it actually got done. But if you look at the moral narratives, actually people didn't share the same moral narratives. If you look at, for some it was religious moral narrative. For people like David
Hume, it was a different moral narrative. There were moral narratives related to driving down wages… In some countries. So, it doesn't necessarily have to be the same moral narrative. But it has to be a moral
narrative that will motivate people and prevent them from being picked off. So, a third feature of effective distributive politics, and
this is hugely important. In some ways, very difficult
sometimes in practice to think about. And this is to pursue proximate goals.
So, one way of thinking a proximate goal is, it's a waystation to a better future that will start you on a road to somewhere where you're gonna end
up later at a better one. So, getting rid of the slave trade is a proximate goal on the way to getting rid of slavery. Of course, it didn't help in the US they had a civil war about it. But it did help in the British Empire, they abolished slavery in almost the whole of the empire by 1833, including by paying 20 million pounds in compensation in various
parts of the empire. And then they spent the next six decades stamping it out,
including getting involved in an undeclared war in South America.
But pursue proximate goals, move, to use an American analogy, move the ball down the field rather than simply trying to throw hail Mary passes every time. So, why is this important? One is that it's important for sustaining coalitions and motivating support. So… If you have a proximate
goal, that's something you can organize your coalition around. You can motivate people to fight for and to achieve. So, if you think about, say, again, repeal of a particular tax. We've gotta repeal the
tax, you know, we… We build the coalition,
we have the meetings, we push the bill. And then you finally achieve it, you can say, we did it. You can get people to focus on, that can motivate them, and it gets them to focus on the result. Or if you think about
the civil rights act, which we spent some time on. The features of the civil rights act that were most effectively adopted involved well defined proximate goals.
Like getting rid of restrictive covenants. The more nebulous goals, such as reducing racial inequality, or integrating neighborhoods much harder to achieve. So, proximate goals are important for moving, you know, moving things along in the direction that you want to go. And for making sure that the best does not become the enemy of the good. A couple of weeks ago,
we had Gidon Bromberg from EchoPeace here to give the part of the lecture that
I had not had time to give when I talked about when we did the Israel-Palestine case.
And I think I saw some
of you in his lecture. Which is on a fascinating topic of using economic interdependencies around climate to work to move the Israel-Palestine conflict in the direction of a resolution. And in particular, the
fact that the Jordan River is drying up, and the two million people in Gaza lack sufficient energy to process their own sewage. Partly because it's
being denied by Israel, the energy, but partly just
an overwhelming demographic pressure has started causing a situation weighing increases amounts of sewage from Gaza being pumped
into the Mediterranean, drifting up an forcing desalination plants in Israel to shut down.
It turns out that Jordan has the best available geographical situation and technology at the
moment for solar energy. And so EchoPeace has come up with an ingenious plan prepared by solar energy that can produce power that will power the sewage plants in Gaza, which will in turn save Israel money. And they've lined the whole thing up so that the incentives work for everyone. And all of the governments know this. And they've even created,
they've raised capital for it. So, there's private sector
interest in doing this. And in several rounds
of peace negotiations, solving this water problem in this way, which would actually integrate the Palestinian, Israelian, Jordanian economies much more and produce co-dependencies has come up. but it's treated as one of
the final status issues. And so the final status issues are these difficult questions to be resolved later. Something that was never allowed to derail the South African negotiations. And so Gidon made the case that it would be much better to solve
the water issue now.
And he pointed out that every Middle East negotiator that had
tried to get a settlement from Clinton to carry,
and others in between, subsequently had said,
we should have dealt with the water issue. So, this is an example, again, that we've videotaped that lecture. But I strongly urge you to go and see it. An example where it would be much better not to let the best be
the enemy of the good, but use the water issue and resolution of the water issue to
take it off the table and move the three
countries into a situation where they would be
more likely to cooperate on other matters in the future. But they're hard cases. They're really difficult
cases in thinking about proximate goals. And the hard cases are where if you pursue a proximate goal, it might make it, instead of being a
waystation to the future, it might actually make the future more difficult to achieve. So, think about Medicare
and social security. Social security, we discussed earlier, was put in place in 1935, and in order to get it through congress, FDR had to exclude the Mexican agricultural workers, because not to do so would have broken up his coalition of Southern democrats who controlled the committees.
And so, that was done later. It was expanded to cover
those workers later. That's, you know, it's not, it wasn't great for the people at the time, but you could say, well, you know, you take what you can get,
and you expand it later. Medicare's a harder
case, because Medicare, put in place in 1965,
part of the great society by Lindon Johnson creates a world we live in today where it's much more difficult to create universal healthcare because the one group that you would want in your coalition has
no reason to be there. Namely the elderly. The elderly, they vote,
they're politically active, but they already
have universal healthcare. And indeed, if you were
gonna go to any of the current plans being proposed, which are being underpriced from Medicare for all, there would be a reasonable fear that Medicare benefits were going to be diluted for the people who already have them. So, that becomes a much harder judgment. It doesn't mean that they shouldn't have gone for Medicare for 65 year olds in 1965, it's just a harder call. It's a harder case, right? Because you're creating a potential to split the coalition that you're gonna need to expand it later.
Because Medicare funding is seen as more of a zero sum system of funding than the way social security is funded about which I will say more in a minute. Sometimes it should be said that this is shooting in the dark. When Bush passed his 2001 tax cut that included the estate tax repeal, it was done through budget reconciliation. And it was gonna go away 10 years later. Actually, nobody had any
idea what that would mean. And you couldn't use the
inertia of the system, because the inertia was
gonna have it go away. It was gonna be repealed back to the 2001 law if nothing was done. So, they were just gambling. And as it turned out,
the Obama Administration made almost all of it permanent as we saw.
So, proximate goals, really important, but you need to always
recognize that pursuing a proximate goal may not
be good in the long run. And so, in that sense, as I said, I think it'd be hard to make the case that if it was Medicare for 65 year olds or nothing, it would have been better to have taken nothing, but it's a hard political call. Entrenching gains. Very important to entrench
gains for the long run, because otherwise, they can be undone.
The classic example of this, of course, is reconstruction. The gains that were brought about as a result of the civil war, yes we got the abolition of slavery, but then we got the 14th
and 15th amendments, and the extension of the franchise, all of which was later undone, because the North was not sufficiently committed to entrenching those changers. If you want an example
of what I'm calling here, the gold standard of entrenchment, it's the way that social
security was funded. So, what FDR did was quite ingenious. They put in the system where, you know, it's a savings plan. The idea is, you work for your lifetime, you pay in, and then when you retire, you get it out. But, that's not the way it's financed. It's not the way it's financed because they wanted to start
paying out immediately. And of course, the first generation of workers in 1935 hadn't paid in.
It started paying out in 1937. Those people had not paid in. And so, in reality, the current generation of workers funds the current
generation of retirees. And when people say there's an IOU in the social security trust fund, that's what they mean. Right? Now, FDR did that for two reasons. One was to build the coalition. He wanted everybody to
support it at the time. So, he wanted existing workers who hadn't paid in to support it. Of course, if you're gonna get it, you know, people about to
retire are gonna get it, they're gonna support the coalition. But he also wanted to make it impossible or very difficult to undo. Right? He said, I'm gonna fund this, he said, I'm gonna set this up in a way so that no damn fool politician can ever undo it.
And so, in 2005 when George W Bush tried to undo it, he ran into the reality that, you
know, what they wanted to do was create private accounts, but instead of the money
going to the government, this was two years before
the financial crisis. It would have been pretty ugly politics if they'd gotten away with it, but instead of the money going into social security, it would be just like an IRA or like we all have. It would be going to an
account that you wouldn't privately manage account. But the problem was, to do this, they would have had to fund both systems for an entire cohort.
Right? Because there's no
money in the trust fund. Right? And so, this in effect is what made the financing of social security, apart from its popularity,
made it bulletproof. So, very clever system of entrenching the program in a way that would make it extremely costly. And as it turned out, eventually the Bush people gave up. But the most important thing, and this should be evident to you from my earlier lecture on bundling is that the way in which you build protection for a policy is to build support for it, and get one of the major parties to bundle it into their major party platform. So, what protected the Civil Rights Act is it's bundled into
the democratic platform. What failed to protect reconstruction is, it was not bundled into the things that Northern republicans cared about. And of course, if you can get it bundled into the platforms of both parties, such as social security effectively is, even better.
So, entrench proximate
gains for the long-term. Resources matter. Resources matter in two senses. Resources for funding the effort. If you look at something
like the estate tax repeal coalition, wealthy… Wealthy individuals put up money to fund the organizing
effort, to get that done. And we give chapter and
verse of that in our book. They paid for the meetings, they paid for the resources
to lobby, and so on. And indeed, the whole rise of neoliberalism was funded not through campaign contributions, but spending on think
tanks and other areas.
So, funding efforts. And then funding the policy. So, what was so brilliant
about social security was, it was immediately
funded by existing workers. So, again, you have to think about the resources, whereas again, go back to Occupy Wall
Street that we began with. One of the reasons the
mayors of most cities just ignored them was that they knew Winter would come, they
would have no money, they would have no resources, and they would pack up and go back to wherever they came from. So, again, they hadn't any resources. And then finally, leadership matters. Leadership matters partly
because all coalitions are unstable.
You need people to articulate. You need people to articulate
the moral narratives to do the work to keep people together. Again, if you think about
the Civil Rights Act. The Kennedy people, they sent civil rights legislation to capital hill in 1963. They had almost no
experience with Congress, and it soon got bottled
up in the committees. And it wasn't until Lyndon Johnson who had been the master of the Senate, this is all told chapter and verse and volume four of Caro's four volume work on Lyndon Johnson. But Johnson understood,
he's widely recognized as one of the most effective legislative politicians of the 20th century. And it was he who figured out how to do the leadership on the
hill to get that enacted. So, you need leadership
in the legislature, you need grass roots leadership. You need to mobilize support for policies, or they're they not going to get enacted.
And of course, you need what's sometimes referred to by consultants as grass tops leadership. You need those Frank Blethens, and you need those Bob Johnsons to push for support if you like to articulate to act as kind of brokers between grass roots support and support in the legislature. But just to finish, effective
politics is not enough. Those six elements are not enough.
If you go back through,
the story I told you about home ownership. There was a great coalition to do it that included politicians
from both parties, it included the lobbyists
from Fannie and Freddie, it included people who were going to make money out of securitization. They had not one, but
two moral narratives. The American dream of home ownership on the one hand, and then racial inclusion on the other.
So, they had two moral narratives. They had great proximate goals. They could articulate how many more homes should be owned
by minority homeowners by benchmark dates. They had proximate goal
after proximate goal. They entrenched the gains indeed. One of the tragedies of it was that it was impossible to unwind when it would have been in the interests of the minority homeowners to unwind it in the ways that Geanokopolis was proposing. So, it became a kind of
pathologically entrenched. The resources were brilliantly generated by the securitization, which created a study cycle of liquidity to produce more of the activity until the music stopped,
to use Blinder's line. And then there was leadership. There was leadership from
both political parties. There was leadership in the country. And there was plenty of
support from business leaders who saw that there
was money to be made. So, building blocks of effective distributive politics are important, but they're not a
substitute for good policy, and you can indeed have
bad policy that meets all six of these criteria.
And that would be the
poster child for that. So, next we're gonna look at good policies that can be enacted by paying attention to these six building blocks. And that's what we'll
start with on Thursday. (soft tonal music).