A Marshall Plan for Greece Makes Sense for Germany

 

by David Attewell

In 1949, Germany lay in utter ruin. World War II had devastated its people and laid waste to much of the rest of Europe. The temptation among the victors was to rain down punishment on the Germans in repayment for the catastrophic violence their militarism had brought upon the continent and the rest of the world.

Instead, the Allies heeded the lessons of Versailles, and abstained from demanding excessive reparations; the U.S infused West Germany with billions of dollars in grants and low-interest loans to rebuild its industrial economy. The Marshall Plan launched a new day for the FRG and the prosperity that followed set the conditions for a democratic, prosperous Germany with a European future.

Europe would do well today to remember these lessons as they look to the ‘Greek problem’.

Labor Market Policy – Tackling the Pyramid

Introduction:

It’s somewhat out of vogue to talk about the quality of jobs and the shape of the labor market at a time when unemployment is so high and the obvious issue is the number of jobs being created. This wasn’t the case prior to the recession, although rather specious reasons were given to justify the rapidly increasing inequality of wages as the outcome of superior education or productivity. What can’t be denied is that even before the recession, we were sliding into a highly unequal labor market in which many low-paid, insecure workers (50% of American workers made less than $26,000 or 230% of poverty in 2010) serve a small number of ever-richer elites.

This trend has only continued since the recession, and it’s a problem that has to be solved if we are to either fully recover or protect ourselves from the next recession.

New Urbanism and Industrial Policy – Toeing the Triple Line

Introduction:

In the past, I’ve written about the way in which new urbanism needs to do a better job attending to issues of class. However, I want to avoid the accusation that new urbanism is classist in the same way that others have made the argument about race. The reality is that the kind of transformations that new urbanism envisions are a lot easier to do with resources, and those are easier to find in a city that’s expanding, and given the history of post-war urban development that tends to be a particular kind of city.

If we want to revive cities, and not just help cities already on the upswing, if we want to bring New Urbanism to the Detroits, Baltimores, and New Havens and not just the Seattles, Portlands, and Denvers, New Urbanists need to bring industrial policy into their worldview.

Beyond the American Jobs Act – Labor Demand Policy

Introduction:

One of the oddest flaws in American public policy is our persistent belief that unemployment and poverty can be dealt with in the main by improving the “employ-ability” of potential workers – in other words, by improving the quality of labor supply.

In the 1960s and 1970s, “manpower development” and “work training” were seen as the solution to moving the poor into a labor market that would surely sweep them up. When Reagan dismantled the War on Poverty and CETA, he left in place training programs as an acceptably bootstrapping policy sufficient to deal with the 1981-1983 recession. Clinton leaned especially hard on training and education as his solution to all problems – the early 90s recession, displacement from NAFTA, welfare reform, and rising inequality. While Obama has gone a step beyond mere job training with the public works of the stimulus bill, his more recent comments about “winning the future” show the persistent strength of supply-oriented labor market policy.

What a shame that it doesn’t work.

Living in the Age of Magical Austerity Thinking

Introduction:

Franklin Delano Roosevelt’s First Inaugural Address diagnosed the essential weirdness of recessions: “our distress comes from no failure of substance,” he noted. “Plenty is at our doorstop, but a generous use of it languishes in the very sight of the supply.” The reason for this? “Primarily this is because the rulers of the exchange of mankind’s goods have failed…they have tried, but their efforts have been cast in the pattern of an outworn tradition.”

This last factor, that in the grip of a massive decline in production, employment, and consumption, the world’s leaders decided to maintain the gold standard and free exchange of currency by balancing budgets, cutting spending, and raising taxes and then to do it over and over again, despite the failure of that policy to show any positive result, is to my mind an absolutely critical one. For all that the critiques of John Maynard Keynes and other dissident economists were eloquent and correct, the reality was that they had been making their arguments for over a decade to no avail.

Today, we seem to be stuck in a similar pattern, where the conventional wisdom on economic policy fails to produce results, but retrenches even more strongly despite this.

Why is this?

Psychology of Public Policy – IHSS as a Model for a New Welfare State

Introduction:

(For previous parts in this series, see here)

One tricky dilemma that progressives have had to face about the welfare state has been the contradiction between our desire to provide universal protection against the great social ills (poverty, disease, lack of education, poor housing, and unemployment), which tends to be broadly supported by society, and society’s resistance to violations of the social norm of reciprocity. The easiest attack on welfare has always been to assert that other people are getting something for nothing and thus divide society between the payer and payee.

While progressives ran headlong into the brick wall of social resistance in the welfare politics of the 1970s, it’s not foreordained that all forms of social welfare have to meet the same fate. It is possible to be both right and smart – and learn to tack into the wind of public opinion.

Looking at the IHSS model gives us one possible solution for how to do just that.

Psychology of Public Policy: Learning from the Stimulus

Introduction:

One of the great ironies of the Obama administration so for is that one of its greatest accomplishments, the stimulus bill, is widely viewed with apathy by the public (44% believe it had no impact, while only 9% more believe it made things better than made it worse, according to the New York Times) but actually was a success; economists agree that the stimulus bill created or saved 3-4 million jobs and added about 2.75% to GDP growth per year.

Understanding the divergence between economic reality and public perception is key to developing an economic policy for the future that both works on the ground and can maintain a majority coalition behind it in the polling place.

In Honor of the Workers of Wisconsin: Classic TRP – In Defense of Public Sector Unionism III

Introduction:

The last installment in The Realignment Program’s re-posting of its series on public employee unions is here, and we turn from defending the idea of public employee unions to thinking towards a more expansive, hopeful vision of how progressives can promote public sector unionism.

Psychology of Public Policy – Social Insurance

Introduction:

The current state of American public policy can best be described as a stalemate: progressives have been stalled on further stimulus efforts; at the same time, conservatives came into power pledging opposition against any cut to a single-payer government health insurance program, and there’s little public stomach for virtually all spending cuts.

As I’ve discussed before, a major reason for this stalemate is ultimately due to how people think about public policy. In reality, neither progressive or conservative ideologies are hegemonic within the American electorate. Instead, public opinion is very much a mix of contradictory and paradoxical tendencies – we want to spend more money on the poor, but are opposed to welfare; we think foreign aid should be cut to a level that’s several times larger than current spending.

In this situation, policy victory goes to finding narratives that present our policies in a way that aligns favorably with public thinking, and in designing policies that lend themselves to narratives that flow with, not against the grain of public opinion.

Beyond Protection v. Liberalization – Dealing With Trade and Manufacturing

Introduction:

In about two years of blogging at TRP (and another two years’ policy-blogging elsewhere), I’ve never discussed trade. It’s not because it’s unimportant, because trade is clearly a major issue within economic policy and politics, but rather because of when I came of age politically. In 2001 student politics, the free trade vs. anti-globalization/protectionism debate seemed remarkably deadlocked and somewhat sterile. Twin camps of policy contenders required allegiance with either side, and I found myself unhappy with the analysis and debate and more drawn to questions of domestic economic policy.

However, in the wake of the Great Recession and the increasingly-urgent need to reassess the structure of the U.S economy, I can’t avoid it any longer. The trade question isn’t the whole of our economic problems, I think it can be exaggerated in a way that obscures a more important class conflict inside nations. And yet, the global balance of trade – between Germany and the rest of Europe, between China and the U.S, and so on – is clearly out of whack.