Listen. Time for New Thinking.

One thing I have noticed in this political environment is that people do not listen to political views that diverge from their own. They believe what they believe, and that’s the end of it. Then they project bad intentions on anyone who disagrees. It makes for useless, though necessary, conversations.

This writer makes a good case for some rational reasoning through the imperative of listening to our politics rather than shouting them. We need to chart the correct path forward and it’s not by turning to the recent or distant past. Those mostly provide warning signs for the consequences of foolish mistakes.

History tells us that populist waves can lead to disaster or to reform…So how might we tilt the odds from disaster to reform? First, listen.

It’s Time for New Economic Thinking Based on the Best Science Available, Not Ideology

A new narrative for a complex age

By Eric Beinhocker 

If 2008 was the year of the financial crash, 2016 was the year of the political crash. In that year we witnessed the collapse of the last of the four major economic-political ideologies that dominated the 20th century: nationalism; Keynesian Pragmatism; socialism; and neoliberalism. In the 1970s and 80s the center right in many countries abandoned Keynesianism and adopted neoliberalism. In the 1980s and 90s the center left followed, largely abandoning democratic socialism and adopting a softer version of neoliberalism.

For a few decades we thought the end of history had arrived and political battles in most OECD countries were between centre-right and centre-left parties arguing in a narrow political spectrum, but largely agreeing on issues such as free trade, the benefits of immigration, the need for flexible efficient markets, and the positive role of global finance. This consensus was reinforced by international institutions such as the IMF, World Bank, and OECD, and the Davos political and business elite.

In 2008 that consensus was rocked, last year it crumbled. Some will cling on to the idea that the consensus can be revived. They will say we just need to defend it more vigorously, the facts will eventually prevail, the populist wave is exaggerated, it’s really just about immigration, Brexit will be a compromise, Clinton won more votes than Trump, and so on. But this is wishful thinking. Large swathes of the electorate have lost faith in the neoliberal consensus, the political parties that backed it, and the institutions that promoted it. This has created an ideological vacuum being filled by bad old ideas, most notably a revival of nationalism in the US and a number of European countries, as well as a revival of the hard socialist left in some countries.

History tells us that populist waves can lead to disaster or to reform. Disaster is certainly a realistic scenario now with potential for an unravelling of international cooperation, geopolitical conflict, and very bad economic policy. But we can also look back in history and see how, for example, in the US at the beginning of the 20th century Teddy Roosevelt harnessed populist discontent to create a period of major reform and progress.

So how might we tilt the odds from disaster to reform? First, listen. The populist movements do contain some racists, xenophobes, genuinely crazy people, and others whom we should absolutely condemn. But they also contain many normal people who are fed up with a system that doesn’t work for them. People who have seen their living standards stagnate or decline, who live precarious lives one paycheque at a time, who think their children will do worse than they have. And their issues aren’t just economic, they are also social and psychological. They have lost dignity and respect, and crave a sense of identity and belonging.

They feel – rightly or wrongly – that they played by the rules, but others in society haven’t, and those others have been rewarded. They also feel that their political leaders and institutions are profoundly out of touch, untrustworthy, and self-serving. And finally, they feel at the mercy of big impersonal forces – globalization, technology change, rootless banks and large faceless corporations. The most effective populist slogan has been “take back control”.

After we listen we then have to give new answers. New narratives and policies about how people’s lives can be made better and more secure, how they can fairly share in their nation’s prosperity, how they can have more control over their lives, how they can live with dignity and respect, how everyone will play by the same rules and the social contract will be restored, how openness and international cooperation benefits them not just an elite, and how governments, corporations, and banks will serve their interests, and not the other way around.

This is why we need new economic thinking. This is why the NAEC initiative is so important. The OECD has been taking economic inequality and stagnation seriously for longer than most and has some of the best data and analysis of these issues around. It has done leading work on alternative metrics other than GDP to give insight into how people are really doing, on well-being. It is working hard to articulate new models of growth that are inclusive and environmentally sustainable. It has leading initiatives on education, health, cities, productivity, trade, and numerous other topics that are critical to a new narrative.

But there are gaps too. Rational economic models are of little help on these issues, and a deeper understanding of psychology, sociology, political science, anthropology, and history is required. Likewise, communications is critical – thick reports are important for government ministries, but stories, narratives, visuals, and memes are needed to shift the media and public thinking.

So what might such a new narrative look like? My hope is that even in this post-truth age it will be based on the best facts and science available. I believe it will contain four stories:

  • A new story of growth [see this post]
  • A new story of inclusion [see this post]
  • A new social contract
  • A new idealism

This last point doesn’t get discussed enough. Periods of progress are usually characterized by idealism, common projects we can all aspire to. Populism is a zero-sum mentality – the populist leader will help me get more of a fixed pie. Idealism is a positive-sum mentality – we can do great things together. Idealism is the most powerful antidote to populism.

Finally, economics has painted itself as a detached amoral science, but humans are moral creatures. We must bring morality back into the center of economics in order for people to relate to and trust it. All of the science shows that deeply ingrained, reciprocal moral behaviors are the glue that holds society together. Understanding the economy as not just an amoral machine that provides incentives and distributes resources, but rather as a human moral construct is essential, not just for creating a more just economy, but also for understanding how the economy actually creates prosperity.

In short, it is time to forge a new vision that puts people back at the center of our economy. To paraphrase Abraham Lincoln, it is time to create an economy that is “of the people, by the people, for the people.” We are truly at a fluid point in history. It could be a great step backward or a great step forwards. We must all push forwards together.

Based on remarks originally delivered to the OECD New Approaches to Economic Challenges workshop, December 14, 2016, Paris.

WTF Happened? Pick Your Poison.

I can agree with the headline of this article, reprinted from the Huffington Post, but the majority of the analysis is plainly inconclusive (see comments). The Big Lesson is: Don’t believe everything you read in the media.

The Big Lesson From 2016 Is That Neither Party Has A Winning Vote Coalition

The Obama coalition turned out to be pretty weak, but Trump’s might be even weaker.

11/25/2016 03:49 pm ET

Donald Trump won the Electoral College by a 306-232 margin, but lost the popular vote by a more than 2 million votes (and still counting) ― more than any previous presidential winner ever has in a split decision. How this happened is a complex story, much more nuanced than most “here’s why Trump won” stories imply. [We don’t seek complexity, but clarity and accuracy.]

Almost all of those stories contain a piece of the puzzle, but in order to see the real story you need to consider all of the explanations combined. Neither party has much reason to celebrate the outcome of the 2016 election. Republicans have a demographics problem, and Democrats have a geography problem compounded by turnout issues. [Fair enough.]

At the state level, the 2016 vote patterns seem to show a sea of red states with blues isolated to the coasts plus Colorado, New Mexico, Minnesota and Illinois. Looking county-by-county, it becomes clear that the divide isn’t just coasts vs. flyover territory; it’s rural-urban. Pockets of blue in the major cities, college towns and a handful of majority-black areas in the South are evident in this view. TheNew York Times’ graphic below shows just how little actual land area went to Hillary Clinton at the county level: She won 15 percent of the land to Trump’s 85 percent.

 

Yet declaring the United States a country divided by population density overlooks several trends that are key to understanding Trump’s success. The urban-rural split is nothing new; perhaps it’s more exaggerated in 2016 than before, but we’ve known for a long time that rural areas are conservative and urban areas are liberal. But if we consider gradations ― not just dividing counties by which candidate a majority of voters selected, but shading by the proportion of Trump and Clinton voters in each county ― the story is far less clear.

If we can’t blame everything on the rural-urban divide, then what happened? There’s not one single reason why Clinton lost several states where majorities voted for President Barack Obama twice: there are several reasons. [Blogger’s Note: Of course there is more than one reason (i.e., variable) that explains this election outcome. The scientific question is what matters most. Again it is the enduring urban-rural divide and how these match up with the parties’ platforms. All these other explanations are anecdotal to this particular election, in other words, not part of a trend. The interesting new trend is the continued weakness of both party coalitions that has been unfolding over the past 25-40 years.]

These Purple States of America

A few, significant, subplots played out in the supposed Democratic “firewall” states of Pennsylvania, Michigan and Wisconsin, and the perennial battleground of Ohio. These states have been close recently, but in 2008 and 2012 Democrats were able to generate support among the rural working class to win over majorities of voters in the states.

But there was a sizable shift in 2016. It’s unclear how many people voted for Trump that had voted for Obama, but Trump did pull a larger percentage of the vote in many counties: more than Mitt Romney did in 2012. That could be in part different groups of voters turning out in 2016 as compared to 2012, but anecdotal stories and survey data reveal that there were some party switchers.

Turnout is part of the picture, though, particularly in Michigan and Wisconsin. AsHuffPost previously reported, turnout was down in Detroit’s Wayne County, Michigan and Milwaukee County, Wisconsin, in numbers large enough to swing the election in those states. Clinton received nearly 78,000 fewer votes in Wayne County than Obama did in 2012, and lost Michigan by under 12,000 votes. She underperformed Obama by 39,000 votes in Milwaukee County and lost Wisconsin by just over 27,000 votes.

Similar patterns of lower urban turnout were evident in Philadelphia and other cities in the Midwest. The numbers suggest these people didn’t vote for Trump: they just didn’t vote at all. And according to reports, the Clinton campaign didn’t make concerted efforts to get them to the polls. Many of these nonvoters were likely minorities who Democrats assumed would support the party in large numbers ― which they do, when they vote.

An additional subplot involves suburban areas and white women. Democrats hoped to make gains in these areas, particularly among typically-conservative women who might be turned off by Trump’s actions and rhetoric. That hope proved false. Nationally, suburban areas and white women voted for Trump in very similar proportions to their votes for Romney in 2012. Romney received 50 percent of the suburban vote, and Trump garnered 59 percent. Fifty-six percent of white women voted for Romney, and 52 percent supported Trump. [All exit poll data – see comments below.]

Nationally, as well as in the Rust Belt, Democrats lost support among the least educated groups. According to the exit polls, education didn’t matter much in 2012: Obama won college graduates by 2 points and non-college graduates by 4 points. Clinton won college graduates by 10 points and lost non-college graduates by 7 points. Relative to Obama’s totals, Clinton gained 2 points among college graduates and lost 7 points among non-college graduates.

The difference is even more stark among whites: Trump won white college graduates by 2 points, but he won white non-college graduates by 37 points. The racial breakdown isn’t provided in the 2012 results, but it’s safe to say there wasn’t that sharp of a divide among whites or there would have been a gap in the overall numbers. Among minorities, Clinton won college graduates by 50 points and non-college graduate by 56 points. Once you account for the educational divide, income doesn’t seem to make a difference in vote choice.

Yet despite all these trends that favored Trump, Clinton won the popular vote by a wider margin than several past presidents. Clinton cut the Republican advantage to around 5 points in the red state strongholds of Arizona and Georgia, and Texas dropped from a 16-point Republican advantage in 2012 to a 9 point win for Trump. California is still counting, but it looks like Clinton blew Trump out by nearly 30 points in the state ― substantially more than Obama’s 23-point win over Romney four years ago. [Duh. CA is an outlier in national politics these days.]

These results were likely driven by high support for Clinton among minority populations, particularly among Latinos and Hispanics in the Southwest. And although there’s some dispute over just how strongly that group supported Clinton, the most conservative estimates from the National Exit Polls indicate that Clinton won Latinos by 36 points. Other pre-election polls show even stronger Democratic leanings among the group.

Republicans also struggled with black voters. Trump’s 8 percent support is actually slightly more than Mitt Romney’s 6 percent in 2012, but slightly less than George W. Bush’s support among black voters in 2000 and 2004. Black turnout was slightly lower this year compared to 2012 as well, which helped states like Georgia stay red. An uptick in turnout among a group that so heavily favors Democrats has considerable potential to shift those states. [Hispanics, blacks, women, whites – these group identity variables are all driven by exit poll data, not reality.] 

The problem is that none of these states actually switched directions. Had Clinton won Arizona’s 11 electoral votes and Georgia’s 16 electoral votes, she still would have been short of the 270 mark, but it would have compensated for the losses in Michigan and Wisconsin, which combine for 26 electoral votes. But neither state appears as close to turning blue as some polls had indicated. So these gains meant nothing for the Electoral College, which is what really matters.

To state the obvious, as long as the Electoral College determines the winner, Democrats can’t rely on increasing support in already-blue states, and it seems that key red states aren’t ready to flip yet. The best strategy for 2020 will be to focus on the very narrow losses in the Rust Belt and win those voters back ― which probably means convincing them that Democrats are a better option for improving their economy than Republicans. Democrats clearly lost that battle this year. [That means a tough economic and social policy reversal for Democrats.]

Meanwhile Republicans will try to hold onto those gains and build their very fragile coalition that won the Electoral College. Whether it survives beyond 2016 is anyone’s guess. The Obama coalition didn’t outlast Obama, but the Trump coalition might not survive Trump.
………………..

A caution: most of the interpretations draw data from exit polls, which usually support the kind of personal narrative desired by media. In other words, the idea that our differences are driven by voter group characteristics is baked in the cake of exit polling. The dominant factor of geography and lifestyle choices is obscured by exit polls. Discount the exit poll inferences accordingly, but then what would journalists write about?

Taken at face value, the argument presented here merely outlines how the Obama era was a one-off and the same may hold true for the Trump regime. (Hillary Clinton could have won and that conclusion would still hold true, as confirmed by down ballot results.) But we have no real indication yet of Trump’s fate and reading the tea-leaves (“might not survive”) is a sign of wishful thinking, not objective analysis. I don’t expect much more from the inherent biases of the Huffington Post.

 

 

 

 

Liberty, Politics, and Justice…

JusticeNotBlind

…a delicate mix.

As readers well know, this blog focuses primarily on economic policy and monetary issues, but policies are not made in a political vacuum. The legacy of the post-60s period in American politics has been distilled down to momentous Supreme Court decisions, which have become the tail that wags the dog of our collective lives. But politicizing court decisions is not really the way “rule by the people” (democracy) was meant to work. No wonder our democracy has become so dysfunctional: as we raise irreconcilable issues such as race, abortion, and sexual preference to the level of national politics, we become divided by emotions or distracted by ‘bread and circuses.’ Meanwhile, the political class runs the government in their own narrow interests. We the citizens become the losers by our own design. Whether winning or losing in this judicial lottery, nobody should be real content with the present state of affairs.

From the WSJ:

Our Rights, Not the Court’s

There’s no good reason to give the justices the last word on race, abortion and gay marriage

 By MARK TUSHNET

Reacting to this past week’s Supreme Court decisions, a conservative law-school colleague told me, “Law matters in the Supreme Court from October to May, not so much in June.” Politics takes over in June, and the Supreme Court becomes a super-legislature, deciding by majority vote what our constitutional rights are.

“Deciding” is the right verb. In June, no serious observer of the Court can think that the justices are just “calling balls and strikes” or interpreting the Constitution’s words or telling us what most people understood the words to mean when they were placed in the Constitution.

But if the justices are deciding rather than interpreting, why should they be the ones to decide, substituting their decisions for ours? The usual explanation is that we can trust them to do the right thing—and we can’t trust ourselves.

After all, some of us think that affirmative action promotes constitutional rights; others think that it violates them. Some of us think that the Voting Rights Act promotes, well, voting rights; others think that it violates the structural principles that make our government worth having.

We usually use our legislatures as the forum in which to discuss and resolve such differences. We call that “politics,” and for lots of issues (tax rates, spending programs, declaring war), we think that politics, with majority rule, works well enough.

So why don’t we use these same institutions for hot-button constitutional issues like abortion rights, gun rights and affirmative action? In these cases, we let nine other people decide, by majority vote, what they think our rights are. That majority vote then becomes “constitutional law.” The great puzzle is, why do we let them get away with it?

Consider the Supreme Court’s decisions this past week. Conservatives liked the rulings upholding property rights, limiting affirmative action and striking down a key element of the Voting Rights Act. Liberals liked the decisions striking down the federal Defense of Marriage Act and allowing California to have gay marriage. Only a few people, though, think that this mixed bag of results should lead us to rethink the whole system. But it should.

What justifies giving the Court the last word on our constitutional rights?

The most common answer is to say that legislatures don’t do a good job of protecting minority interests. Liberals think that Congress messed up in enacting the Defense of Marriage Act, failing to protect the interests of gays and lesbians. Conservatives think that it messed up in re-enacting the Voting Rights Act, failing to protect the sovereign equality of states. And so on down the line.

But the Voting Rights Act shows that Congress sometimes does protect racial minorities. And though gays and lesbians are clearly a minority in the country, the rapid spread of legislative recognition of gay marriage shows that some legislatures can protect their interests too.

Another common view is that, though conservatives and liberals like some decisions and dislike others, they all hope that the justices will get it right eventually—becoming conservative or liberal across the board. Everything will be fine, they think, if only the justices get their heads straight about the Constitution.

But there is no reason to think this is going to happen. Maybe if we get a long run of conservative or liberal presidents, enough new justices will be appointed to make the Court consistently conservative or liberal. That happened with the Warren Court, for example. But the Court didn’t become consistently conservative even with Republican presidents appointing every justice from 1968 to 1994.

A third perspective is purely strategic. Pick your favorite policy outcomes, and then do a complicated calculation. For each issue, ask, “How likely is it that I will win in the legislature and have the courts uphold my victory? How likely is it that I will win in the legislature only to have the courts snatch my victory away? How likely is it that I will lose in the legislature but get the courts to give me what I want?” Then weight each issue according to its importance to you. Finally, add everything up. If, on balance, you get more of the policies that you like from letting the courts oversee the legislature, you should be for judicial review. Otherwise, you should oppose it.

I think that this is an entirely sensible way of deciding whether you like judicial review or not. But I don’t think anyone actually goes through the calculation, which is maddeningly complicated.

A final perspective would be to resign yourself to the status quo, take your victories when they come and live to fight another day when you lose.

This might make sense, at least if you’re not completely annihilated on the battlefield. The Court usually does leave paths open to renewing the fight in ordinary political arenas. Voting rights advocates can try to get Congress to enact a new coverage formula. Defenders of the traditional family can try to get Congress to enact more precisely targeted restrictions on benefits for people in gay marriages. But why should they have to bother? They won these battles once, and the only reason they have to re-fight them is that five justices thought they were wrong about who had what constitutional rights.

Some scholars say that all of this is no big deal because, if we put aside some short, anomalous periods, the Supreme Court never gets too far out of line with the national majority. But if this is true, what’s the point of judicial review? To police those states that depart from national views? To cleanse the statute books of antiquated laws that no longer have majority support?

Maybe. But note that this is not what happened in last week’s decisions. The Voting Rights Act was re-enacted in 2006, the Defense of Marriage Act was adopted in 1996, and affirmative action has lots of supporters today.

If judicial review is a problem, what can we do about it? I’m fond of a Canadian innovation that Judge Robert Bork also found interesting: Let the justices strike down statutes they think are unconstitutional and give their explanations. Then let Congress respond. If a congressional majority agrees with the Court, the decision stands. But if a majority thinks that the Court got it wrong, Congress can override the decision.

I, for one, would welcome a chance to engage in constitutional politics. My own policy views are so eccentric that I can’t count on any justice to reflect them consistently. I’d rather take my chances trying to persuade my fellow citizens and representatives to agree with me.

The Games Politicians Play

shell-game

In case you were wondering about what our government is doing in Washington, this from Ron Fournier of the National Journal:

 

Obama’s sudden burst of public outreach coincides with a drop in his approval ratings, noted first by Democratic pollsters advising the White House last week and now surfacing in a spate of public polls. This raises the uncomfortable question: Is this schmooze-a-thon a legitimate act of humility and leadership or a cynical public display?

I can’t answer that question because I don’t pretend to know Obama’s state of mind. I can tell you that some of his advisers are no more convinced that this strategy will work than they were a few days ago.

“This is a joke. We’re wasting the president’s time and ours,” complained a senior White House official who was promised anonymity so he could speak frankly. “I hope you all (in the media) are happy because we’re doing it for you.”