Kevin Drum misses the mark

I just saw this via Twitter. Mother Jones's Kevin Drum correctly draws our attention to the fact that a large majority of American adults don't want Medicare to be gutted. I find that unsurprising, but it's indeed worth pointing out. But he misses the mark when he suggests that it would be "interesting" to know how "people" (which people? which class? etc.) would respond to the same question were it paired with options such as "higher taxes, lower taxes, etc.". I quote:

I'd like to see a followup that paired each option with the taxes it would require. In other words, your options would be:

• Major changes & taxes about the same as today
• Minor changes & higher taxes
• No cost control & and significantly higher taxes

I'm willing to bet that the results would be roughly the same, with perhaps a chunk of the "no cost control" folks moving into the minor changes column.

But I might be wrong, so it would be worth finding out. These kinds of questions, after all, are pretty useless if they're not tied to anything else. I mean, who wouldn't be in favor of leaving everything the way it is if they don't understand that it might cost them more?

I have two things to say here. First of all, it's ideological and tendentious to put things in such general terms as "higher taxes" or "lower taxes". That's not how things work. The Republicans and Democrats, who've invested a lot of time and energy giving tax breaks to the rich in particular, know this. We need to know who is going to face higher taxes and who isn't. To remove class from the framing of the question is not to make the question more neutral. It is to skew it in a reprehensible way. It is to paper over very real (and, indeed, uncontroversial) facts about the way that wealth and income is distributed in our society. So we need to which taxes are to be raised, and who's going to pay them. Surely Drum doesn't think a flat-tax is better than a progressive tax. But if he thinks that, he should revise his suggestions since they have the same logic as a flat tax (i.e. make it impossible to only increase taxes on the rich).

Working class people justifiably worry about their taxes going up. Socialists don't dispute this. They don't like taxes as such. Now, to ask workers to sacrifice more in taxes isn't always a bad thing, depending on what they get in return (e.g. they pay more in taxes and get guaranteed health care, but cease to pay health insurance premiums that are much higher). But in general, it is a burden on working class and poor people to ask them to sacrifice more of their already small paychecks. Moreover they do all the work in this society and already pay their fair share... it's unjust and absurd to ask them to pay more. But for the well-to-do there is no comparable burden. We can use fancy economics language here: the law of diminishing marginal utility clearly entails that receiving $100 dollars when you're broke is of much greater significance than receiving $100 when you're Bill Gates. By the same token, losing $100 dollars is a tremendous burden to a poor person, but virtually negligible for Bill Gates. It is absurd to ignore all of this and talk abstractly about "higher taxes" as such, as though we were all already equal and on some level playing field wherein the question had the same significance for all of us.

Second, the original Medicare question was ideological as well. It frames things along a one-dimensional axis, where do nothing and do something are the options. I'm a socialist, and I probably endorse a "do quite a lot!" sort of position, but it's unclear that I share any common ground with Neanderthals like Paul Ryan who interpret "do quite a lot" to mean "gut Medicare like a trout". So the "major changes"/"minor changes"/"no changes" axis is already problematic. To be sure, we get some information from the question, since it is surely a more progressive position (in today's context, problematic though it is) to defend the Medicare status quo than to open it up to attack by reactionaries in both parties. But my point still stands: it is tendentious to frame things in this way, and it's not possible to express a preference for vastly increasing Medicare service in such a poll. That it is not on the political agenda right now is a separate problem. What the poll should try to do is find out what people really want- that way we can, in a non-question-begging way, determine the gap (which is sure to be quite large!) between people's aspirations and the reality of our political system.

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Making a Fetish of the Deficit

It is widely assumed in political rhetoric and newspaper articles that there is some intrinsic value that attaches to "balancing the budget" or "reducing the deficit". Some even go so far as to argue that this should be the fundamental goal of policy right now. That is flatly incoherent and irrational. Let me show why even the most hardened right-winger cannot coherently claim that deficit-reduction is an intrinsic good.

If the need to reduce the deficit is, as some say it should be, the most pressing and important task of policy makers, then it should trump all other concerns. Such deficit-hawks should have no qualms whatever about cutting services, closing public schools, letting bridges crumble, and so forth. But, even as hard-line as many of these right-wingers are about austerity, the question still remains: if deficit reduction is a goal that trumps all else, why not immediately end all spending on law enforcement, prisons, airport security, not to speak of the enormous amount of money spent on "national defense"? Why not shut off all public water utilities, turn off all traffic lights, and cut off all electricity in every publicly owned building in the country? Why not, in effect, plunge the country into complete chaos for the allegedly fundamental goal of generating a budget surplus?

Because nobody, not even the most hardened right-wingers, actually thinks that the mere existence of a budget surplus is necessarily a good thing. Nobody thinks that utter social collapse is an acceptable trade-off for a balanced budget. Because what good is a "balanced budget" if the government can't even fulfill its basic functions? What good is a budget surplus if society is in in complete disarray and the vast majority of people are made very badly off by it?

Thus, if pressed, nobody actually believes that deficit reduction is good-in-itself. At best, it is merely a means to some other goal (whatever that is). Even the ruling class has goals apart from balanced budgets; they could basically care less about balanced budgets themselves. So to fetishize deficit-reduction as an allegedly intrinsic good makes no sense, no matter what your politics are. Such fetishism is irrational because it puts the cart before the horse, it imputes value to something that simply couldn't have the kind of value imputed to it. It confuses means and ends. It is incoherent, because the fetishism of deficits clashes with other commitments that any rational person (yes, even right-wingers) has (e.g. the belief that the function of the state is to create the conditions for ruling class profitability, or that the function of foreign policy is to expand U.S. influence and hegemony abroad, etc.).

Thus deficit-hawking is seen for what it is: window dressing for other goals which are neither defended with argument nor made explicit. It is a red herring that distracts us from issues worth discussing (e.g. should taxes on the rich be increased? what is the basic goal of government in a just society? should the economy meet human needs or should it focus on profit?). In the Marxist tradition, we call such bundles of ideas "ideologies", since they have the function of making unequal power appear legitimate by some unsavory combination non-rational and rational means.

What deficit-hawks would really like to say is the following: we should cut social spending because it does nothing toward restoring profitability to the system and does nothing toward furthering dominance abroad. Whereas bank bailouts and foreign wars are good things, jobs and education spending is not. Thus, since corporate welfare, big ruling class tax breaks, and imperialist foreign policy do fulfill these aims, at very high costs to taxpayers, they are not criticized. But, of course, making an explicit case for imperialist war and corporate handouts is not an easy sell, since these goals plainly brush against the grain of the interests of the majority. Hence it is better to focus our attention narrowly on marginal questions of little significance (e.g. whether the government is "in the red" or not... because who is it that thinks, other things being equal, that going into the red is good?). Better to ask us to fetishize whether the "government is paying its bills like American families are asked to do" than to actually reflect on where revenues come from and where they are best spent.

This ideology is no less dominant in the Republican Party than it is in the Democrat Party. Obama is the most visible proponent of it in the US right now. His debate with Republicans is, basically, over who has the "best" plan for reducing the deficit. It is assumed on both sides that this irrational, incoherent fetishism is a good thing. Any rational progressive movement would challenge these basic assumptions, rather than falling in line, self-censoring and perpetually sending checks to candidates who reproduce these abysmal conditions.

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"Deal" Reached, Obama Elated

Obama, the Democrats and the Republicans have all reached a deal. They've resolved to make deep, punishing cuts to the living standards of the majority of Americans. $39 Billion in cuts will be made (though, of course, the cuts won't be made to the budget of the two (three?) ultra-expensive, as yet unpaid for, wars and occupations).

This is just such a great day for America. "Partisan squabbling" was set aside for more basic goals that both parties share. I just love the way Democrats and Republicans came together to pursue a cause they're both passionate about, namely austerity. I'm so pleased that the parties were able to "transcend politics", reach across the aisle, and do what's best for the ruling class. This warms my heart, you know? This is just like that magical moment when Obama and the Democrats came together with the GOP to extend Bush's tax breaks for the rich. At the end of the day, there's nobody quite as talented as Obama at bringing Democrat and Republican together around a common message of "prosperity for the few, austerity for the many". What an achievement. God Bless America.

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Of the 1%, by the 1%...

Stiglitz has a piece in Vanity Fair (here) blasting neoliberalism. It's worth reading. Here's an excerpt, blasting the bullshit marginal-productivity theory of distribution:

Economists long ago tried to justify the vast inequalities that seemed so troubling in the mid-19th century—inequalities that are but a pale shadow of what we are seeing in America today. The justification they came up with was called “marginal-productivity theory.” In a nutshell, this theory associated higher incomes with higher productivity and a greater contribution to society. It is a theory that has always been cherished by the rich. Evidence for its validity, however, remains thin. The corporate executives who helped bring on the recession of the past three years—whose contribution to our society, and to their own companies, has been massively negative—went on to receive large bonuses.

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Turning the Clock Back

Via the Guardian:

Planned Parenthood has become a symbol of the kind of government spending that fiscal conservatives reject. The clientele of Planned Parenthood is the intersection of many groups that are considered unworthy by fiscal conservatives: lower-income, female, assumed to be unmarried and/or queer. Conservatives have argued, roughly forever, that such women should be cut off from any federal spending, with the hope that deprivation will force them to marry for sustenance. If women can avoid childbirth, they're less needy, and in the conservative imagination, that much more likely to avoid getting married for support. The fact that Planned Parenthood touches on the anti-sex faction of the Republican party is an added bonus, ensuring that they'll have rabid support from anti-choicers.

This is horrifying, to say the least. Republicans want to turn the clock back and re-institutionalize forms of gender domination that have been undermined by organizations like Planned Parenthood.

But I reject the framing of this as a "cultural issue" (and, in general, I reject the claim that gender oppression is a mere "cultural issue", though there are, of course, cultural dimensions to all forms of oppression). This is part of a broad onslaught against the majority of Americans: austerity. This is coming first and foremost from the ruling class, not from poor backward conservatives. And this particular destructive austerity measure will hurt working class and poor women more than anyone else. That is not to say that there aren't poor and working class people, especially men, who will get behind the assault on women's freedoms. They will, and they should be vehemently opposed and challenged for doing so, hopefully by a renewed and reinvigorated abortion rights movement in the US. But let's be clear: this isn't some isolated policy issuing in the first instance from grassroots reactionaries. This is part of a broad onslaught against working class living standards. But ruling class politicians in the GOP are smart: they break the onslaught up into different parts and try to sell the various parts as best as possible by pandering to racism, sexism, and other toxic ideologies.

Again, as always, it is a huge mistake to paint this as a battle between progressive Democrat politicians (who are supposed to stand up for women's rights) and conservative Republicans (who on the whole want to maximize the oppression of women wherever possible). This gets the Republicans right, but gets the Democrats wrong. This is not a "cultural" disagreement between "social liberalism" and "social conservatism", for two reasons. First, this is occurring in the context of the broad framework of austerity, accepted by both parties. The Democrats accept the need to make punishing cuts to public goods, and many of them even accept the need to cut funding for PP in particular. Second, the Democrats aren't crusaders for women's liberation. They mostly do nothing on that front, and, worse yet, the Democrats have been happy to throw women under the bus and allow assaults on abortion rights and other gains. Bart Stupak was a Democrat.

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How to Fix the Deficit

Here. Of course, there are problems with the NYTimes options. The sorts of taxes they allow you to meddle with are excessively narrow and confined to those already in existence (what about an intangible property tax, for instance?) Moreover, they only let you raise taxes on the rich to "Clinton-era Levels" which were already indexed to the neoliberal era begun under Reagan. For instance, we must note that the top marginal rate of income taxation was low during the Clinton-era. It would do this country some good to let everyone use this gadget with the added option of raising the top marginal rate on income as high as they like.

Below is the history of the top marginal tax rate on income (i.e. the rate paid by the richest earners who constitute less than 1% of the population.... right now it means that the rich pays 35% on every dollar earned over $373,000):
What you should notice first is that it was raised significantly in the 1930s (from 26% to 60%, later from 60% to 80%). It remained above 60% from the 1930s until the 1980s when Reagan cut it back down to pre-Depression levels. That is, it remained significantly above 60% during the longest, most sustained period of economic growth in the history of the United States (the so-called "long boom" from WWII through the early 70s). When the NYTimes says "Clinton-era rates", they mean a meager 40% top rate, but there's no reason in principle why we shouldn't raise the top rate significantly higher than that right now. After all, in the 1950s it was even as high as 90% under Republican presidencies! So it's just false and disingenuous to claim, as Republicans (and many Democrats) do, that high top marginal rates mean anemic growth. In reality, the fight over taxing the rich has nothing to do with growth or efficiency, and everything to do with class power. That is, the profit-hungry ruling class doesn't want to pay for this crisis themselves: they want to force the working majority to clean up their mess. Their credo is: socialize the losses and risks, privatize the profits and earnings. And their sway in Congress is such that the lowly Democrats hardly even hesitated in pushing through an extension of the Bush Tax give-aways for earners over $250,000. Obama didn't even fight for his campaign promise to return taxes on the rich to pre-Bush levels, and I think that speaks volumes about what the Dems stand for. By further eroding the funding for the public goods that are now on the chopping block, they paved the way for the brutal cuts that are being proposed now. There is no reasonable way to interpret the "budget war" as a struggle between Right and Left. It is a struggle between hard-Right and soft-Right. It is a debate between two bullies about how many times to punch us in the stomach; it's not a debate about whether we deserve to be beat up at all.

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Don't let it fool you

This is justly derided as reactionary filth.

But the inference that we're asked to draw is that Obama and the Democrats have a "sharply contrasting vision" that must, insofar as the GOP's plan is so bad, be much better. This is irrational.

I've got an idea: Let's not draw any inferences about the Democrats stand for merely by looking at the Republicans. If you want to understand what the Democrats are about, look closely at their policies and compare them to any plausible conception of social justice. What becomes obvious upon doing this is that the Democrats are only disagreeing with the Republicans about how deep to cut, how far to push the regime of austerity. The parties aren't disagreeing about whether to cut. That question is proscribed at the onset. The "debate" among the two parties is entirely internal to the ruling class policy of austerity.

As I've argued elsewhere, the entire discourse surrounding budgets makes it appear impossible that we could do anything but cut. I call this budget-cut fatalism. This is an ideological blinder that shifts our attention away from what matters and instead focuses us on marginal questions friendly to austerity.

In order to see that this is so, we have only to ask two questions. First, why is there a budget crisis? Second, what is the full range of options available to deal with it?

The first question is easily answered: deficits and budget shortfalls are cropping up in states, municipalities, and counties all over the country because of the global economic recession (brought on by the reckless gambling of investors in the financial sector). Accordingly, as in any recession, tax revenues have fallen off a cliff, while unemployment and demand for social services has soared. Moreover, regressive tax policies have (for decades now) have slowly starved public coffers of much needed funds by in large measure exempting the rich and powerful from paying their fair share. . At the Federal level, the deficit is a combination of these factors, such as economic meltdown and big tax breaks for the rich (I note that the Bush tax breaks, which Obama extended, has cost $2.74 Trillion over 8 years) but others as well, namely, the ultra-expensive wars our government has been bankrolling since 2001.

Though this is obvious and basically uncontroversial, it is shirked by the defenders of austerity. They act as though the budget shortfalls were caused by "reckless government spending". Thus they are able to appear credible in claiming that the government must learn to "live within its means". But for that to be true, we'd have to ignore all of the above evidence while also believing that governments (at the municipal, state, Federal level, in various different countries from Greece to the UK to the USA) suddenly decided to dramatically increase spending between 2008 and 2009. Of course, that's not what happened. As everyone knows, budgets weren't in the awful shape that they're in now only 2-3 years ago, so we have to explain the sudden change from then to now. But anyone who's been conscious the last 2-3 years also knows that this thing, the global economic recession, has kinda been a notable economic event. To say that "reckless spending" is the culprit is ad hoc and unjustifiable. Budgets are in the dumps because the floor dropped out when the recession hit, causing tax revenues to drop dramatically.

Having answered the first question, the answer to the second is rather obvious. Our options are as follows. One is to severely cut the living standards of the majority of Americans through austerity, thus forcing them to pay the price of the crisis they didn't cause, the wars which they oppose, and the tax give-aways to the rich which don't benefit them. That's the option pursued enthusiastically by Democrat and Republican alike.

But there are clearly other feasible options. For example, we could end the wars and occupations right now, thus saving trillions of dollars over the next 10 years (we could also drastically reduce the Pentagon budget). Moreover, we could easily raise taxes on the rich to cover the budget shortfalls: chop from the top, as they say. We wouldn't even have to raise them very much (though, I'm for raising them much more). For starters, we could ask G.E. to pay some taxes at all. We could easily institute a windfall tax of 2% on profits, which makes sense given that the ruling class made record profits (amidst a recession!) last quarter. Similarly, we could institute luxury taxes of various kinds, we could reinstate the estate tax, and we could raise the top marginal rate for income taxation. We could increase corporate taxes and sharply increase funding for enforcing the existing tax laws by cracking down on rich tax evaders. There are lots of options here.

All of these options would have no impact whatsoever on 99% of the population's tax rates. Moreover it would hardly "cripple the economy" or anything like that at all; it would simply tap into the vast, unproductive surpluses of the rich (who have become so at the expense of the vast majority of us). The unjustified dogma that high marginal rates of taxation are incompatible with economic growth is just that: unjustified dogma. From 1945-1973, the longest most sustained economic boom in US history, marginal rates of taxation were twice as high as they are now. They were even as high as 90% at times. So it's just false to say that high marginal rates slow economic growth and its groundless to complain that such rates would "hinder the recovery". What recovery? There has been no recovery yet for working people. Taxing the rich would be a way of stopping the lot of the rest of us from getting worse.

This is all a way of saying: if you want to support the Dems merely because they are the lesser evil, then fine. But don't pretend that they're not an evil. Don't talk as though they actually represent a progressive force in the US. Don't pretend that they are looking out for the interests of the vast majority of us. They are a party dominated by ruling class interests and their policies and actions in government make this painfully obvious. If the best you can muster is the lesser-evilist argument, then fine. But you've got to admit that that's thin gruel. So refrain from buttering the Dems up and pretending that lesser evils are something more than what they are. If you, like me, aren't satisfied with the lesser-evil... the answer isn't to project your political ideals onto them. This is wishful thinking, a paradigmatic failure of rationality. The answer is to get up and organize, mobilize, and be part of rebuilding the Left in this country.

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What Vulgar Economists Do

"The vulgar economist does practically no more than translate the singular concepts of the capitalists, who are in the thrall of competition, into a seemingly more theoretical and generalized language". -Karl Marx, Capital (Vol. III), p.817

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R.I.P. Manning Marable

(via NYTimes). This is a serious loss. I was looking forward to seeing him give a talk in Chicago in May on his new biography of Malcolm X.

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How To Argue About Taxes (and How Not To)

"Myopia afflicts the contemporary legislative process in the US in a dramatic and simple way, in the form of tables that set out the distribution of tax burdens associated with various tax reforms. Most government transfers are excluded from these burden tables, including, most importantly, Social Security and Medicare. It seems clear that a tax burden that is matched by an equivalent transfer is not, in the relevant sense, a burden at all... But the problem would not be solved even if all money transfers were included in the burden tables. That too would be arbitrary, so long as we excluded in-kind benefits such as roads, schools, and police, not to mention the entire legal system that defines and protects everyone's property rights. If literally all government benefits were taken into account, however, we would notice that almost no one suffers a net burden from government. We would be forced to conclude that there is no separate issue of the fair distribution of tax burdens, distinct from the entirely general issue of whether government secures distributive justice. This might be described as a question about the allocation of different benefits of taxation, expenditure, and other government policies to different individuals; but that looks very unlike the original question." (pp.14-15, The Myth of Ownership, Nagel and Murphy (Oxford: 2002)).

The point is that it is false to claim that we can intelligibly discuss "tax burdens" as an isolated matter apart from the social/economic system of which taxation is but a small part. In particular, it is preposterous and unjustifiable to merely examine or criticize "tax burdens", conceived of as levels of taxation on whatever (income, consumption, etc.) without also looking at the way that taxes are spent.

If, say, my income tax goes up by 5%, say by $1000/yr, and I get unlimited access to higher education (which is worth much more than $1000/yr), it would be absurd to say that my increased rate of taxation means an increased "burden". I haven't been burdened in the slightest- I've just netted quite a lot of value. It would be pointless to debate whether my 5% was, in itself, fair or unfair without considering what we get from taxation: services, a functioning society, basic social institutions, a more equal and fairer distribution of resources, etc.

But that is how the conversation is set up in mainstream "debates" about taxes. It is a discussion merely about "burdens" and whether they should be lifted just a bit or quite a lot. If it's not economists going on about what's most "efficient" or "best for growth" (as though these underspecified goals were the only values relevant to the determination of tax policy), it's politicians blathering about how to distribute the "tax burden" fairly. Now I don't want to suggest that we shouldn't pay attention to the distribution of tax rates. How tax rates are distributed is an extremely important- I've argued many times on this blog that working class tax rates should be decreased while corporate taxes, estate taxes, and the top marginal income tax rate should be steeply increased. It matters a great deal whether we have, say, a flat income tax or a progressive income tax, or whether capital gains and dividends are taxed at the same rate as wages.

Moreover, I'm not saying that taxes can never end up being a burden. For many people in the US, they absolutely are. For working class and poor people, deeply regressive taxes can end up being quite burdensome indeed. But they are burdensome on the assumption that basic needs go unmet despite the fact that people's relatively low income is taxed at a high rate. When a working class person faces high consumption taxes that increases the cost of food, that is clearly a net burden. But say that this same person pays high premiums for health insurance from a for-profit provider every month for inadequate coverage. If we were to institute a single-payer system, this person's taxes might well increase. But it would be false to say that this person is now enduring a new, increased burden. On the contrary, they would no longer have to pay high premiums to a for-profit insurance agency, and they would receive far more extensive care than they received before. What they pay in taxes is less than what they paid in premiums, and they now receive more extensive care for less money. This is clearly a net gain. The language of "burden" here is a red herring. Again, we can't make sense of the justice of tax policies without examining, among other things, what goes in and what goes out. If my taxes go up 2% and I get 25% more in terms of goods and services, it would be bizarre to say that I'm now burdened 2% more than before.

Thus, there is no abstract way to say whether a certain rate of taxation, all by itself, is burdensome or not- we can only know whether its burdensome by looking at the balance of what one pays in and what one gets out of it. We have to examine someone's class position. If we operationalize this in dollar terms, we could say that a particular policy was burdensome if and only if I paid far more into the system than I got out of it. And to calculate "what I get out of it" we have to add up a long list of social goods, institutions and services: roads and infrastructure, legal systems and courts, educational institutions, public parks, libraries, fire protection, Medicare/Medicaid, and so forth.

So, for the vast majority of us, taxation in general will not be a burden in this sense at all. Conversely, for the ruling class, taxation probably will be a "burden". They will, it seems, be required to pay more into the system than they are likely to take out of it in terms of services and public goods. Again, in a narrow sense, if the system of taxation is progressive (i.e. if the average rate of taxation increases with income) the rich will pay more into the system in dollar terms then they get out of it in services. But there are three reasons that nobody except ruling class parasites should worry about this.

First, it isn't quite right that the ruling class puts more in than they put out. In order for them to earn any profits whatsoever, they need a set of basic public institutions (legal system, police, military, courts, infrastructure, anti-trust regulators to guarantee competition, etc.) that make it possible to own property and have a market economy at all. Markets aren't "natural" in any sense whatsoever: they are conventional and require quite a lot of "big government intervention" in order to exist at all. Though we are encouraged to forget this and ignore it, the obvious fact is that private property is a legal convention, not a fact of nature. "We are all born into an elaborately structured legal system governing the acquisition, exchange, and transmission of property rights, and ownership comes to seem the most natural thing in the world. But the modern economy in which we earn our salaries, own our homes, bank accounts, retirement savings, and personal possessions, and in which we can use our resources to consume or invest, would be impossible without the framework provided by government supported by taxes". All of this must be in place in order for a capitalist economy to exist at all: the basic institutional framework underwriting markets are not "free", they must be paid for by tax revenues. So, to be sure, isn't exchanging equivalent for equivalent if we add up the taxes they pay alongside, say, the value of the education they procure from a free public university. But it's a fact that the ruling class needs a lot of government intervention (to break strikes, to intimidate protesters, to thwart social movements, to intervene globally to create a good business climate, to protect property, etc.) to make the profits that it makes. And that intervention is not free: there's a sense in which the ruling class owes the government "rent" for being there to create the conditions for profitability. Of course, power relationships mean that the ruling class is often in a position to get out paying this "rent"; thus they make working people pay it for them. They are, after all, just trying to maximize profits for themselves, even if this means socializing necessary risks and costs. The ruling class way of life is as follows: evade all costs, exploit ruthlessly, externalize risks and wastes, and jealously covet all the earnings that it can get its hands on.

Second, there can be no ethical objection to the idea of taxing the rich at much higher rates. On the contrary, there is something deeply unsavory, morally speaking, about the person with massive surpluses who refuses to relinquish any whatsoever to help those with nothing. The idea of paying according to one's means is a basic ethical principle that seems rather hard to reject. Such a principle correctly abhors the vices of avarice and miserly tendencies to hoard things for oneself. Moreover, it is absurd to ask Bill Gates to pay the same dollar amount in taxes as a working-class single mother. To object to that is to depart from our ordinary moral horizon entirely, so the ethical objection to taxing the rich hardly holds water. But, as we will see below, this moral/ethical element only arises on the condition that the pre-tax income of the ruling class is legitimate. But it is not. It is already tendentious for a ruling class person to say that their pre-tax income is "theirs" in some fundamental way (it is only "theirs" under a particular regime of property relations and public institutions which they willfully ignore in discussions of taxation). But even if it were "theirs", there are still very strong, and quite uncontroversial, ethical reasons to think that the "pay according to one's means" principle is sound. Cough it up, moneybags.

Third, it is false that the ruling class receives in profits exactly what they deserve as a result of their productive efforts. That's not how markets work. Markets aren't conscious, they aren't aware of who deserves what, and they certainly aren't in the business of rewarding people. Some of what determines market distributions is brute luck, some of it has to do with allocating resources in such a way that profit is maximized, some of it is short-sighted irrational craziness (as in the buildup to the recession we're in). In principle, I needn't do anything productive whatsoever to earn profits on an investment. Arbitrage is the most obvious example: this is when someone moves massive amounts of capital very quickly to exploit a small, temporary shift in exchange rates between, say, two currencies. This is how Soros made his billions. There is nothing productive whatsoever about such transactions. This is simply a case of money making money.

So, incomes in a market economy aren't in any sense based on what one "deserves". Often, many deserving people are denied employment simply because there is no way to profitably employ all of them. For the most part, incomes in a capitalist economy are determined by the office or position one occupies in the economy. And depending on the location of that office/position you have more or less economic power- and it is primarily the degree of economic bargaining power that determines your income. For example, if you're an un-unionzed worker in a labor market in which unemployment is high, then employers have a huge amount of economic power over you. They are in a position to push wages down in part because there are many workers competing against each other for scarce jobs. Because of your powerless position as an unemployed worker (you have nothing to take to market but your own capacity to work), your income is liable to be low. On the other hand, if you own large amounts of alienable productive resources (e.g. a factory, large amounts of resources) you are in a position to command a very high income indeed. It's not how productive you are or how hard you work, in the end, but what particular office you occupy within the system that largely determines your income.

Let us not forget that capitalism is a society in which the ownership of the means of production is concentrated in a small fraction of the population's hands. The majority of people in capitalism do not have large amounts of capital or land that they could invest for a profit; the only important productive asset most people have is their ability to labor. This means that those who own the means of production are in a position of power vis-a-vis others in that society, and thus they are in a position "to demand returns in the form of profit, interest, and rent". Most people, therefore, are not in a position of economic power such that they may extract profit, interest and rent from others.

Let me say a bit more about this to drive the point home. Marxists aren't claiming that capitalists and landowners never derive any income from, say, improvements to their land or labor they expend managing their firms. What fraction of income landlords and capitalist receive as a result of their labor is not, strictly speaking, what angers Marxists. What Marxists see as problematic is that fraction of income that capitalists and landlords receive, just because they are owners of capital or land. Their main complaint is about "money making more money" in a society in which the majority don't have such a luxury and must therefore work for every dollar they earn.

The basic problem here is that the ruling class can only earn profits on the condition that there is a large class of people who do all the labor necessary to produce profits in the first place. The ruling class can only make their massive fortunes on the condition that they own and control the means of production, whereas the majority of us do not. Their social/economic power comes from the fact that they control what we need to survive- jobs on the one hand, and goods and services on the other.

And as any child can tell you, if all the workers in a society simply stop working, the whole society grinds to a halt. If they were to stop working indefinitely, the ruling class would wither on the vine- they wouldn't even be able to continue to eat and procure their own means of subsistence. What this shows is that they are plainly dependent on a system of social labor. This is why the ruling class pulls out all the stops to prevent and to break strikes. Ruling class persons, then, are hardly self-created, isolated producers who create something out of nothing. They occupy a particular place in the economic system, and it is in virtue of their place vis-a-vis production that they are able to have the power they have, and earn the incomes that they do. So to say that there is some sense in which they "deserve" their pre-tax income is absurd. To say that they it is an illegitimate intervention into their private affairs for them to be taxed is patently false: their pre-tax income is only possible because of a massive, public system of social labor (which is not ignored at production time, but is happily ignored at tax time). Their income is not a private affair- they need the rest of us who do the work if they are to earn it! When the day comes that the ruling class produces everything they have entirely by themselves, on a deserted island, without the help of anyone else, then perhaps their complaint will have some merit. But of course they wouldn't be a ruling class anymore in such a case- they'd just be some weird person on a island who makes all their own stuff. They'd have no power over us and they'd have no way of exploiting our labor for profit.

But as long as they need the rest of us to have what they have, they should dispense with the bogus talk about the "privateness" of what they earn. It is public in every sense of the word- and it is justly taxed by society in order to fund the basic institutions, services, and goods that are required if any society is to flourish.

But though socialists support the demand to tax the rich, this isn't the goal of socialist politics. The goal of socialist politics isn't to achieve an "optimum" (whatever that would be) level of taxation on the ruling class; the goal of socialist politics is to transform society in such a way that there is no ruling class. The goal is to bring the basic structure of society under the democratic control of the people, rather than leaving it under the dictatorial control of the capitalist class.

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Cornel West on Obama

(via Al Jazeera) See here. What he has to say about Libya in particular is quite good.

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G.E. and Ruling Class Tactics

I was among many who noted the perversity of the fact that G.E. got away without paying any taxes last year. That's right, zero. That's the company who Obama lauds as providing a viable way forward for America and the global economy.

Now it turns out that G.E. hasn't yet received enough concession from the majority of us. They want more. It turns out that they now want their workers to make serious concessions (via American Leftist) regarding their wages and health benefits. Richard over at AL explores the question of how unions fit into the picture of how we should resist this brutal class war from above. I myself think the "union question" is always a contextual one- in conjunctures in which the informal economy is quite large, it may turn out that traditional trade unions aren't the most effective immediate vehicle for resistance. But in the US, I think the position taken on unions associated with the Marxist (esp. the Trotskyist tradition) and class-struggle anarchist tradition basically should still stand. The position is that unions must be important sites of struggle, organization and resistance but they have limits. They constrict the horizon of possible political action to largely defensive struggles that respect the limits imposed by ruling class institutions. Also they can be parochial in their political aims- sometimes inclined to overlook struggles against oppression that may or may not have immediate impacts on the struggle for wages, contracts, and so on. This is why I'm convinced we need more than unions- we need a radical left organization capable of putting forward arguments within the labor movement for increased militancy and strike action, but also capable of keeping the long-term perspective in view (i.e. revolutionary transformation, anti-capitalism, etc.).

But in the present conjuncture, we should be doing everything we can to protect the meager labor organizations that exist. They are being placed on the chopping block- and it seems to me that organizing militant labor action in a right to work state is much more difficult than it is in a state with a history of unionization. The left has to orient itself toward the rank and file (as in past struggles, especially MN in 1934).

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Democrats Push Austerity in New York

Democrat Governor Andrew Cuomo has "struck a tentative deal" in New York that includes big tax breaks for the rich and deep cuts to health care and education:

The deal would end a temporary income tax surcharge on high-income New Yorkers, which some have called the "millionaire's tax" even though it affects incomes starting at $200,000 annually.

Mr. Cuomo’s aggressive and strategic approach to negotiations appeared to have yielded significant victories, including a year-to-year cut of more than $2 billion in spending on health care and education, the two largest drivers of New York’s ever-growing budget.

Predictably, the NYTimes paints this as a prudent move and speaks of "bloated" health care programs. This is treasonous as far as I'm concerned- to say that our already inadequate public health care and education institutions are bloated is horrifically misguided. If anything is bloated- it is the massive, record-breaking profits raked in last quarter on Wall Street amidst widespread social misery, unemployment, and, as above, steep drops in working class living standards. Chopping from the top is a perfectly fair and efficient approach to balancing budgets that were sunk by those at the top. There's nothing risky about it- it's rather simple actually. Thus we must ask: why is it that Democrats staunchly refuse to pursue such a course of action? Why are they dead set on forcing the majority of the population -who had no hand in the causation of the economic crisis- to clean up the mess caused by Wall Street? Any honest answer would have to include the fact that the Democrats are not a progressive political force. When push comes to shove, they side with their own- the ruling class. So while Democrats are busy breaking their arms patting themselves on the back for not being as extreme as Scott Walker, the rest of the country would do well to recognize that they are still pursuing a program of austerity for working people. They don't bite the hand that feeds them- when it comes down to it they'll pass the tax breaks for the rich before they preserve the schools of the poor.

As I keep pointing out, the proper way to assess the Democrats is to ask where we'd like to go and whether the Democrats are a good means of getting there. Crudely put, what the majority of us want is simple: to end the wars, to tax the rich, and to fully fund health care and education. Are the Democrats a plausible vehicle for attaining such goals? Well, they passed a health care "reform" bill written by insurance industry lobbyists when they had supermajorities in the Senate, so that's a clear "no" on the health care front. And, as we know, Obama gladly inherited two wars, sharply escalated in Afghanistan, and has now intervened militarily in Libya. Moreover, the Democrats pushed through a continuation of the Bush tax cuts and have been steadily chipping away at education and health care at the same time. Obama's "race to the top" education policy is a more aggressively conservative program than "No Child Left Behind". At the very least, liberals have to concede that the Democrats are a rather poor vehicle indeed. I would say that instead of an actual vehicle the Democrats are more like a virtual reality ride at a carnival (you know, the ones with screens inside that make you feel like you're flying but in fact take you nowhere at all). The sooner that progressives dump the aptly-described "graveyard of social movements" that is the Democratic Party, the better. What we need are independent left-wing organizations, with political clarity, that are rooted in workplaces, campuses and neighborhoods, which are organized and ready to fight for social justice.

Instead of buying into the "de-escalate and let us handle everything" message of the Democrats, what we need is precisely the opposite. We need to reject the idea that the Democrats are the legitimate leaders of Left movements and we need to embolden the burgeoning progressive fight-back that is growing out of this crisis. Wisconsin was inspiring because of the explosion of ambitious political energy that grew out of the big protests and demonstrations. It has ceased to be as inspiring of late because the Democrats opportunistically jumped on board, extinguished it, and transformed it into an electoral gain for them the next election cycle. This is instructive for the Left. If I were in an organization that dogmatically latches itself to the Democrats no matter what (e.g. like Democratic Socialists of America, Progressive Democrats of America, and others) I would be doing some serious soul-searching right now.

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What's Exciting About This New Era

The axe is coming down hard. Due to the economic crisis, ruling classes are foisting austerity upon working people the world over. But there is resistance. It is in its early stages, but we've already seen a few glimpses of what could happen when the sleeping giant is awoken. As Richard Seymour eloquently puts it in a recent post:

It was something that I haven't really seen en masse before. It was something that some people had written off. They said was a bit old hat, doomed to a slow, dwindling death, if it even really existed. It was the working class. Not the working class in the shitty, nostalgic, culturally regressive sense that people invoke, not the deus ex machina mobilised to berate black people and gays for being too assertive of their legitimate rights. It was the working class as an agent of its own interests; it was a class for itself. It was the labour movement, every bit the multicultural entity that Cameron reviles. And that movement, comprising several millions of people, having lain dormant for years, is now looking decidedly up for a fight. If you're a socialist in one of those workplaces on Monday morning, you should have an easier job arguing for militant strike action now, because people now know what they could not be sure of before: that we are many, and they are few.

In some ways, this is what it felt like to be at the 200,000-strong rally in Madison a few weeks ago. It's heartening to know that working people in Britain are fighting the same fight. It's not clear what will happen in the short-term, but what's obvious is that the potential for a mass, working-class fightback is greater now than it has been at any time since the 1930s. There is a radicalization going on- whether it will be organized into a force that can shake the neoliberal edifice that's been erected over the last 40 years remains to be seen. But the potential is there, and that's exciting.

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Another Chavez Middle East Blunder

Here. Combined with his remarks re: Gaddafi, this is a real whopper. The contradictions within the Venezuelan revolutionary process are on full display here. To be sure, we should steer clear of a moralistic foreign policy in which the demands of international realpolitik are ignored. But this isn't mere realpolitik- this is the self-anointed leader of the Latin American Left more or less shitting on a rebellion from below. This is the "anti-imperialism" of fools. Now, predictably this will be manipulated by the bourgeois press to "prove" that Chavez is a "tyrant", "dictator", etc. because he's supporting the Syrian ruling elite (as though Obama doesn't support similarly repressive, and authoritarian regimes!). But this facile conclusion hardly follows. This doesn't "speak volumes" about the ALBA Left in Latin America. This isn't going to equip us with some "deep" insight as to the "true motivations" of the Left movements challenging U.S. imperialism in Latin America. But it does show those on the Left some of the drawbacks and difficulties facing the Chavista path to socialism. As always, the Venezuelan Left (as with the Left writ large) needs an increase in struggle from below -precisely of the sort exemplified in the (ongoing) struggles in Egypt, Tunisia and elsewhere.

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GE's Tax Bill? ZERO.

General Electric, the nation’s largest corporation, had a very good year in 2010.

The company reported worldwide profits of $14.2 billion, and said $5.1 billion of the total came from its operations in the United States.

Its American tax bill? None. In fact, G.E. claimed a tax benefit of $3.2 billion.

Read the rest here. Set aside the recent Democrat extension of the Bush tax giveaways to the wealthy. Just focus on the G.E. thing for a moment. When the Democrat-apologists trot out their tired arguments for why you should hold your nose and spend money, political energy, time and votes getting Democrats elected to office... just remember that this appalling class tax disparity went unchallenged by a Democrat-controlled House, a super-majority Senate, and a popular young President who talked big about change. It remains unchallenged, in fact, as the article makes clear, Obama applauds this kind of thing:

In January, President Obama named Jeffrey R. Immelt, General Electric’s chief executive, to head the President’s Council on Jobs and Competitiveness. “He understands what it takes for America to compete in the global economy,” Mr. Obama said.

That's the political face of the Democrats, folks. That's supposed to be the best we've got. Now, I would never deny that the Dems are often less offensively right-wing than the hapless Republicans. But let's not kid ourselves about who the Democrats are and who they represent. If you are truly on the Left, then you have to believe that there is a irresolvable contradiction between where we need to get to and what the Democratic Party (as a national, heavily business-influenced organization) aims to accomplish. We have to ask: where do progressives want to go, and can the Democrats take us there? You only have to think rather modest things like "we should have a national health care program (e.g. like Canada) that covers everyone unconditionally from cradle to grave" to find yourself in a position where you have to answer "no".

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