Sensible Progressive Reform

December 21, 2020 11:59 PM

Mr Medlock and the Classics - "It seems helpful to begin with an outline of what some social democratic goals might be. One description might be competitive egalitarianism. This has two components. Firstly, it recognises that people deserve equal worth, having been brought into this world by the arbitrary lottery of birth - as such, inequality can only be justified on the basis of the Rawlsian difference principle.[1] Secondly, it notes that markets do not exist ab ovo, but instead are moulded by the laws and norms of the land. As such, we can use those laws to produce markets which serve the public interest.[2]" (via)

To get this sort of collectively beneficial creative destruction, we need a population that is adequately supported in all aspects of life. This can only be provided by governments - as such, what we are looking for is society as a service. In effect, you pay a fee (better known as taxes) in order to get services like risk-pooling, income-smoothing, poverty-elimination, public goods etc. This can manifest itself into policy proposals in several ways. I’m going to highlight five key strands.

1. Tax positivity. Insofar as governments exist to solve collective action problems, they are only able to do so via funding from taxation. And that’s something we shouldn’t shame, but instead celebrate.
2. Welfare positivity. We should be providing benefits in a universal fashion without the odious and exclusionary apparatus of means-testing.
3. Robust state provision. An effective state is one that invests in its people’s capacity and uses state capacity to address market failures.
4. Full employment labour markets. When there are job opportunities and when workers are empowered, we can fix other issues in society.
5. Social wealth funds and YIMBYism. Insofar as wealth begets wealth, we should make financial and housing wealth widely accessible.

In all of this, it is important to remember than the equity-efficiency tradeoff which often stymies attempts at this competitive egalitarianism is somewhat unfounded. In fact, efficiency requires equity to some extent, and equality of opportunity cannot be divorced from equality of outcome. Suppose the first generation had equal opportunities at the beginning - almost as soon as that occurs, the next generation and onwards will have unequal opportunities due to their forebearers being rewarded for previous merit. In fact, what we see is that the competitive market equilibrium is suboptimal if there is substantial inequality, in part because surplus is not a reliable measure of welfare. One example of this is in conservation and environmental policies, where pricing policies are less effective compared to prescriptive policies in reducing water consumption due to differences in household endowments.[3] Another would be the fact that more equal countries have more intergenerational mobility. So we need a state that balances equity and efficiency such that they complement each other.

These are not goals that are ridiculous. The Nordics aren’t collapsing. In fact, these are goals we’ve seen achieved in some form or another across the world. And many of these successes have been made possible by linking tax-and-spend policies together, or by engaging in broad tax-and-spend policies which are low salience and income-replacing. So this is very much a viable policy agenda!

also btw...

• One of my most deeply-held beliefs is this: "Societies that believe and invest in their people succeed. Societies that do not, fail."[4,5]
• Three Big Moves to Improve American Lives ASAP [ungated] - "Where you get to live, what you get paid, and how you access health care should be policy priorities next year."[6,7,8]

Higher minimum wages would help those at the bottom, but the most effective remedy for the overall economy would be a return of union power. Unfortunately, labor unions in the U.S. are forced to organize establishment by establishment, putting any unionized shop at a competitive disadvantage.

The solution -- the third big policy I would choose -- is known as sectoral bargaining. It allows all the workers in a particular industry within a particular area to get the same wages as the unions that negotiate with groups of local employers. Countries that use this system tend to have higher union representation and less wage inequality. Sectoral bargaining would allow Americans in a huge array of occupations to feel like they had a bigger stake in the economic system, and thus might even improve productivity as an added benefit.

• Fifty Years of Tax Cuts for Rich Didn’t Trickle Down, Study Says - "Tax cuts for rich people breed inequality without providing much of a boon to anyone else, according to a study of the advanced world that could add to the case for the wealthy to bear more of the cost of the coronavirus pandemic."
• Me: "OK MMT people, you need to tell me how you think fiscal expansion affects inflation, and under what circumstances you think we should --"

Republicans: We can't give people $1200 checks in a pandemic because of THE DEFICIT

Me: Never mind, MMT is great

• What can an economist with mainstream training learn from MMT? "I articulate my answer in a new paper titled 'A Blue Paper on Modern Monetary Theory'. Here are the background and a quick summary."[9]

The crux of the problem: the distinction between nominal and real magnitudes is often vague. A quick refresher: “nominal” are things measured in the unit of account (e.g. dollars, euros, etc.); “real” are the same things measured in stuff – goods and services – that ultimately affect people’s well-being... The ultimate question is then when and how the public deficit/private surplus turns into higher real income, and thus higher people’s well-being...

The upshot: the government must have exclusive access to a "technology" – broadly interpretable as a way to either directly produce, coordinate, regulate, etc. -- that is superior to that available to the non-government sector. And the government must be credible.

MMT stabilization policy — some comments & critiques - "A government's 'solvency constraint' is not a function of any accounting relationship or theories about the present value of future surpluses. A government's solvency constraint ultimately lies in its political capacity to levy and and enforce the payment of taxes."

I think this is true, a deep and powerful way to think about public finance. Note that a government’s “political capacity to levy and and enforce payment of taxes” depends first and foremost on the quality of the real economy it superintends. The value that a government is capable of taxing if necessary to sustain the value of its obligations increases with the value produced overall. A government that wishes to be solvent should first and foremost interact with the polity in a manner that promotes productivity. Secondly, the political capacity to levy taxes depends upon either the legitimacy of or the coercive power of the state. A government that wishes to sustain the value of its obligations must either gain the consent of those it would tax or maintain an infrastructure of compulsion. In theory, either choice could be effective, although along with the libertarians, I like to imagine excessively coercive regimes are inconsistent with overall productivity, so that legitimacy is a government’s best bet.

posted by kliuless (14 comments total)

At some point we’re going to have to collect all of your posts on the subject and turn them into a remedial economics curriculum for capital’s moral propagandists of the last century. Some sort of Economists Anonymous; step one is admitting you have a problem.
posted by mhoye at 5:37 AM on December 22, 2020 [5 favorites]

Something I appreciate about Medlockism, and the Soc Dem strain of thought more generally, is that it provides us with a leftist view of the world that is based on a positive narrative of the what it will create. The alternative Democratic Socialist model that seemed ascendant with Bernie really left me wanting this year due to how mean-spirited and exclusionary it has become (although I think Bernie himself is still great).

Like, I am not an optimistic person by nature. But I do realize that you cannot build a broad-based political movement through cynicism alone. People need to be able to easily envision the good life you will create for them if you join their side. Conservatives have the upper hand here because their “Back to the 50‘s” program, for all its good and very bad, is easy for people to understand. For the left to effectively counter that they will need a similarly simple message. The Soc Dem faction’s “we will be there for you your entire life” message is much more compelling than most of the left messaging I’ve seen lately, even if the end goal is the same.
posted by scantee at 5:56 AM on December 22, 2020 [4 favorites]

Wait, who is James Medlock? I see a twitter account that links to a medium account with one post, which links back to the twitter account. Google isn't turning up much else. Is there any context here for why this particular twitter take on economics is insightful or noteworthy?
posted by trig at 6:19 AM on December 22, 2020 [1 favorite]

Wow, I look forward to digging through these links. I've been thinking a lot about Rawlsian political theory this year, and although it is a useful for organizing principle for more equitable policy, I struggle with how you convince conservatives that equality is a good value. Many conservative christians believe that God choose you to be born, so he must have put you in a poor family for a reason. And despite all data to the contrary, believe that is you work hard and believe in God you will be taken care of....
posted by CostcoCultist at 6:51 AM on December 22, 2020

>Is there any context here for why this particular twitter take on economics is insightful or noteworthy?

Medlock, rather inexplicably to me, has become a twitter meme. It's noteworthy because it's a progressive take that's slightly askew to mainstream sentiment, i.e. leaning in to tax-positivity, and that a strong welfare state can't exist without broad-based taxes, as opposed to a narrow "tax only the rich" perspective that's become in vogue but cannot actually fund the programs we need.

_Why_ he's become twitter-famous enough to warrant "Medlockism" as a term is beyond my ken. But very amusing.
posted by pmv at 7:04 AM on December 22, 2020

Chris Dillow: Restraining capital

...the issue here is power. The same forces that empower big corporations to make the rules also empower them to inhibit reform – or even to reduce the chances of a reforming government being elected at all; some of these forces are of course not under the deliberate control of specific capitalists but are rather emergent processes.

A lot of technocratic politics and economics is idle fantasising: “here’s what I’d do if I were king”. It misses the point: how do we achieve the power to restrain big capital?

posted by TheophileEscargot at 7:08 AM on December 22, 2020 [3 favorites]

All I know about Medlock is that he's a darling of r/neoliberal and that I enjoy his tweets- I look forwards to working through this post. Thanks!
posted by Braeburn at 7:28 AM on December 22, 2020

Gotta represent for the excellent "Philosophize This!" podcast and its take on Rawls.

Yes, it's pop philosophy. And if that helps these ideas get exposed to people who want to know more today than they did yesterday and would not normally see them, it's a better thing than all of the "correct" philosophy that goes unseen.
posted by lon_star at 9:23 AM on December 22, 2020 [1 favorite]

Most people dream of being rich themselves someday. Any political movement that doesn't engage with this reality will not succeed. Even though it's a dumb metaphor and a complete smokescreen for what the Republicans actually push for, Reagan's "a rising tide lifts all boats" was (and remains) persuasive to many, many Americans.
posted by PhineasGage at 9:44 AM on December 22, 2020

> A lot of technocratic politics and economics is idle fantasising: “here’s what I’d do if I were king”. It misses the point: how do we achieve the power to restrain big capital?

"Restraining big capital" sounds like it accepts big capital but just wants to keep it under control. It appears as though Dillow would like to go further than that with countervailing, anti-capitalist forces.

But then he speaks about an "anti-capitalist" hegemony, which sounds like he just wants that force to make capitalism "healthy". What's the goal here? Is this a weird Hegelian approach to Neo-Liberalism?
posted by oneboiledfrog at 9:59 AM on December 22, 2020

Is there any context here for why this particular twitter take on economics is insightful or noteworthy?

I honestly have no idea what Medlock’s real job is (or even if that’s his real name, actually?) He just talks about this stuff online a lot and is fairly sharp, seems to bridge the “social democrat” and “democratic socialist” audiences in a way.
posted by atoxyl at 10:15 AM on December 22, 2020

I agree with all five strands presented, but what's been driving me more and more left over the last few years is my doubt that we can restrain big capital. The whole problem as far as I see it is that over the last 70 years we've basically seen a progressive deregulation of rules that kept capital in check and lead to the massive inequality position that we're in today. Basically we're putting citizens, some of whom show some talent, against major league political players. Money begets political power. First amendment restrictions stop money from becoming equivalent to speech.

I'm not sure where the right road lies. All I believe is that, if nothing else, everyone should be allowed to live, at a minimum, a simple but dignified existence where all basic physical needs are met. If you want more? Earn it. How that system is implemented I'm not entirely sure but I'm pretty sure it won't involve big capital being benevolent.
posted by Your Childhood Pet Rock at 10:17 AM on December 22, 2020

What's the goal here? Is this a weird Hegelian approach to Neo-Liberalism?

It's a modern riff on Keynesianism, a demand-side economic paradigm that's hopefully finding its way back from the wilderness, because a lot of what's ill about "capitalism" nowadays can really be laid to rest specifically at the feet of supply side economics.
posted by tclark at 11:00 AM on December 22, 2020 [1 favorite]

But then he speaks about an "anti-capitalist" hegemony, which sounds like he just wants that force to make capitalism "healthy". What's the goal here? Is this a weird Hegelian approach to Neo-Liberalism?

I think this will be the decade that sensible progressive reforms to capitalism, as dictated by neoliberalism's finest technocrats, will really take off. Sure, we are still feeling the devastating effects of the 2008 financial crisis combined with decades of suffering compounded by white supremacy, but considering these technocrats are still very much in power, that obviously indicates the strength of their credibility.

This time will certainly be different. I'm sure of it. Just a few sensible reforms here and there and we will have evaded the total collapse of the biosphere.
posted by Ouverture at 2:10 PM on December 22, 2020