New Year, Old Orthodoxy: On Marx, Myerson, Rolling Stone and Redistribution

One of my resolutions for 2014 is to be more open about my neo-Marxist principles. 320px-Marx_head_pageMost of my friends and peers know about my dirty secret, but there are nevertheless many times where I find myself referring to my ontology as that of an “economic structuralist” or some other innocuous appellation that does not conjure the intellectual baggage of Stalinism, the Soviet Union and Siberian prison camps. Perhaps I am subconsciously insecure about people instantly writing me off as a naïve utopian who unwittingly supports genocide or I am understandably reticent to get dragged into heated conversations about why it actually isn’t insane to be a self-identified Marxist in the 21st century. At any rate, it can be hard out there for an out-of-the-closet socialist.

Just ask Jesse Myerson. Last weekend, Rolling Stone published an article he wrote entitled “Five Economic Reforms Millennials Should Be Fighting For.” These reforms are: full employment for the population, an unconditional basic income, a land-value tax, the redistribution of capital income and publicly-owned banks that actually serve the public interest. In response, conservative pundits swiftly condemned the proposals as the wishful thinking of a blissfully ignorant college socialist who just doesn’t “get” the real world. A handful of more moderate individuals admitted that some of these ideas were not insane, although they nevertheless expressed skepticism and, in the case of Josh Barro of Business Insider, distanced themselves from Myerson because his “political aspirations” are communist and, therefore, bad and crazy.

As has been noted in many places, none of Myerson’s suggested reforms are particularly extreme or even especially Marxist. Full employment, at one point, used to be a valued cornerstone of Western politics, at least until the 1970s. Unfortunately, despite all the bellyaching we hear today about “scroungers” collecting unemployment benefits and thus having no motivation to seek work, there does not appear to be any impetus at all for government programs based around putting jobless people into public works or public service jobs. The fact is we have a crumbling national infrastructure, with roads and bridges in desperate need of repair, and plenty of states have fired teachers, police officers, and social workers, despite woeful education statistics, rising crime rates and rising poverty. A very similar argument is articulated over at the well-known Marxist-Leninist newsletter, The Economist.

The Economist has also in the past expressed some reserved support for a universal basic income, noting that it would help many Americans escape poverty and make them less dependent on the low wages and limited benefits (if any) provided by their employers. The Economist notes that a universal income would not on its own eradicate poverty or erase income inequality, but when you combine it with Myerson’s guaranteed jobs and the retention of existing social programs, the pitfall of treating universal income as an economic panacea is avoided. Admittedly, even with a combination of assured income and qualified welfare benefits, some people would still manage to end up in rough times. Still, at least they would be there because of their own choices rather than the contractions and busts of market forces.

On the land value tax proposal, I actually disagree with Myerson and in agreement with, funnily enough, Karl Marx. The idea of taxing land actually originated with Henry George, and Marx was no fan of Georgism and his attempts to “purify” capitalism. If you think about it, land is a God-given resource that should be in the ownership of all, and while taxing it may seem like a nice way to capture the wealth of landowners to redistribute it, it would also hit poorer people like small farmers whose assets are primarily land rather than intangible investments (which make up the bulk of wealthy people’s assets). I have greater endorsement for Myerson’s proposal of communal land ownership and reject Barro’s objection that “governments are not very good at being real estate developers.” This argument does not really address the fact that most private landlords are also terrible at developing and maintaining real estate and that at least governments (if admittedly more in theory than in practice) are more accountable to the people than real estate magnates like Donald Trump and most predatory landlords are.

Concerning income inequality, Matt Bruenig at Demos has argued that it is on the rise in the U.S. because owners of capital are capturing more and more of the national income while less and less is going to workers. Redistributing that income is a daunting prospect in any policy design, but Bruenig sees promises in Myerson’s suggestion of sovereign wealth funds, where the government collects capital income earnings and then supplies citizens with some of the wealth. Again, Barro cries foul, appealing to poor financial regulations and the potential for government mismanagement of state revenue. Yet, once more, these reservations have nothing to do with the policy in question but rather symptoms of the status quo. There is no reason to believe that, if we ever reach a point where we adopt Myerson’s reforms, we cannot also at the same time massively improve our financial regulatory apparatus and bolster transparency and government accountability when it comes to spending. The government already wastes tax revenue on illegal wars and mass surveillance; at least with reallocating income it would be a risk for a good cause.

Finally, when it comes to publicly-owned banks, Barro again dips into the “government pathologies” bucket and expresses concern about waste, bureaucratic redtape and320px-War_of_wealth_bank_run_poster something akin to the Spanish “slush fund.” Again, the answer lies in building accountability and transparency into the system: making transactions public, who is buying what, what sellers are making, and so on. Honestly, it is risible to convey anxiety about the behavior of a potential public bank when private banks have been notorious for hiding information and making shady deals. Indeed, much of the present crisis can be placed at the feet of banks that were behaving badly behind closed doors. Moreover, how many times do we hear about the U.S. Department of Justice making settlements with banks to dare to disclose such trifling details like, say, which of their clients were breaking the law? Public banks would not be perfect, but far better than what we have.

I could pick apart Myerson’s proposals for pages, but what I really find most galling about the buzz surrounding his article is the smug, condescending attitude that “kids these days” just want stuff without working for it and, living in our bubbles, we simply do not understand that free market economics constitute the “end of history” and that, warts and all, the current system cannot be improved upon. The hard truth is that many millenials (including yours truly) ended up living with their parents after college because of the worst fiscal crisis since the Great Depression caused by this very confidence that the neoliberal strain of capitalism had prevailed above all paradigms, that widespread deregulation and tax breaks for the wealthy was the answer, and that a rising tide for the richest among us would end up lifting all boats. In the end, we ended crashing against the shores of the current epoch, in which young people are laden with debt, lucky to find a job right out of school and are more dissatisfied than ever with a political system that does not represent their interests and seems intent on debating just how drastically to ensure that the decades ahead will be ones of intense austerity and greater hardship.

What seems crazy to me is not that people like Jesse Myerson are daring to propose reforms so outside the mainstream, but that so many people continue to defend a “conventional wisdom” that has so consistently and catastrophically failed.

As an aside, Macy’s reported recently that its sales increased by 3.6% in November and December. As a growing “job creator,” they decided to close multiple stores and fire 2,500 employees. Yay capitalism!

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