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Monday, October 30, 2017

His own words: The 14 principles of 'Xi Jinping Thought' – BBC Monitoring

Sam Webb: Democracy, Socialism, and the Communist Movement

Democracy, Socialism, and the Communist Movement

Below is my reply to my good friend Juan Lopez, who thoughtfully commentedon an earlier post of mine. In hope of making it intelligible to the reader, it's written as five separate "observations." I know it's long, but I hope you will give it a read anyway. Thanks again to Juan.

1. My concern is with concentrated political power in a socialist society. This wasn't always so, but in the wake of the meltdown of the Soviet Union and much of the socialist world, it seemed like a no-brainer to take a fresh look at my thinking on this crucial matter (and many others). Standing in place made no sense to me.

Engels once said that revolutions by their very nature are "authoritarian." And the socialist revolutions of the 20th century gave proof to his observation. What Engels didn't anticipate was that the authoritarian moments of the revolutions in Russia and other countries would become but the first step in the centralization and monopolization of power by the communist parties that led them. As a result, after a short burst of freedom and mass participation, democracy and democratic institutions in workers' states turned hollow and formal; civil society, not the state, withered away; dissent retreated into the kitchen; competing parties were illegalized; and in the Soviet Union during the Stalin era, massive crimes were committed.

Socialism thus never became a democratic society of "self-governing producers," as envisioned by Marx and Engels. Notwithstanding the official rhetoric and ideology of the ruling communist parties, the working classes didn't become the architects and creators of a classless society in which "the free development of each is the condition for the free development of all." (Marx and Engels, Communist Manifesto) Nor was the state transformed from "an organ dominating society into one completely subordinate to it." (Marx, Critique of Gotha Programme) Instead, a command economy, a top-down political structure, a massive internal "security" apparatus, an overreaching state, and Marxist-Leninist parties that brooked no competitors became socialism's template — in the Soviet Union in the first place.

Twentieth century socialism, of course, did achieve successes, domestically and internationally, including some that were historic. Moreover, those successes were secured in conditions of economic backwardness and feudal traditions, not to mention invasions, blockades, and cold war.

But neither the achievements nor the difficulties erase the long arc of unfreedom that hung over and deeply wove itself into the fabric of socialist societies in the 20th century. Ultimately, this pervasive and persistent deficit proved to be a huge factor in undoing the Soviet Union and the Eastern European socialist countries.

And yet, through most of my years in the Communist Party USA, we ignored, minimized, and, on many occasions, justified, this reality. In doing so (and I say this in hindsight — I was on board with our talking points for much of that time), we compromised our politics, moral authority, and socialist vision.

How can we explain this?

Any explanation begins with the party's uncritical attitude towards the Soviet Union. Criticism of the premier country of socialism was a no-no, though there were a few brave souls who did. Gil Green, who'd headed the Party's youth organization in the '30s, spent years in a federal penitentiary, during the McCarthy period, and was a national leader for decades, publicly opposed our support of the Soviet intervention in Czechoslovakia in 1968. For this (and other positions that went against the party's positions) Gil was turned into an outlier.

But for most of us, criticism of the Soviet Union was the last thing on our minds. The first land of socialism, after all, had transformed a backward society into a powerful and advanced socialist country in the face of a bloody counterrevolution, proved decisive in the defeat of Nazi Germany, and was the foremost adversary of U.S. imperialism in the last half of the 20th century.

Moreover, the "Great October Revolution," was the stuff of legend in the communist movement. It enjoyed a revered status, provided tons of inspiration, and, to a degree, constituted a model of what a revolution should look like.

Indeed, the images of the October Revolution — dual power, insurrection from below, sharp breaks and ruptures, relentless struggle against right opportunism and liberalism, and the indomitable Lenin and his "party of a new type" — captured the imagination and fired the enthusiasm of U.S. communists. To be fair, though, the party also projected a more expansive vision, dictated by concrete realities and the country's democratic and radical traditions of struggle.

Finally, the Communist Party of the Soviet Union, in our view, stood at the center of the world communist movement. It didn't necessarily issue directives, but then it didn't have to. When it talked, we listened, as did many other communist parties around the world.

It was, in effect, above reproach. Even Stalin's massive crimes were, in our ideological-political gymnastics, if not fully justified, seen as a necessary price to pay, given the hostile conditions in which socialism was being built.

This uncritical attitude toward the USSR (and other socialist countries aligned to Moscow) was reinforced by our knee-jerk understanding of working class partisanship and an instrumentalist (ideas are instruments of action and their usefulness depends on their practical utility) and economistic approach to socialist democracy.

Working class power and state ownership of the means of production were considered the hallmarks, the true core, of socialism. By contrast, broad and meaningful democratic participation in every sphere of life were reduced to a means, not an end; not an indispensable feature of socialist society.

If it came down to a choice between the consolidation of class power (narrowly defined) or democracy in our calculus, it was no choice at all — class power won every time. The evisceration of socialism's democratic essence barely received a second thought. Never did we consider the political, human, and moral costs to socialism of such a posture and practice.

Is it any wonder then that when tens of millions of people, from Berlin to Moscow, took to the streets to express their dissatisfaction with socialism as they had experienced it, too many of us were dumbfounded and deaf to their democratic aspirations and desires. Our worldview, not surprisingly, couldn't accommodate their voices.

Instead, we vilified, with the fury of a lover spurned, Mikhail Gorbachev and his team of socialist and social democratic reformers, most of whom came of age during the "Khrushchev thaw," as class traitors, right-wing opportunists, and worse. Meanwhile, we nostalgically hoped against hope for a return to the glory days of Soviet power. And other than attaching the phrase "Bill of Rights" to the word socialism, we dug in our heels and doubled down on "Marxism-Leninism." A deep rethink of socialism and the role of communists wasn't in the cards at that point.

Of course, not everyone was of this mind. In fact, it was at our fractious national convention in Cleveland in 1991 that someone of stature stated forthrightly that Stalin should be unequivocally condemned.

That someone was Herbert Aptheker, a long-time party leader and an outstanding historian. Aptheker, who ironically had been an ardent defender of Soviet power earlier, declaimed with great passion that Stalin was guilty of unconscionable crimes, not mistakes.

The breaking of the silence on this matter, however, was only momentary. Soon after that convention, Aptheker and nearly half of the membership left the party and any discussion of Stalin's bloody and dictatorial rule and its degradation of the spirit and essence of socialism went with them.

In fact, not long after the convention, Ken Cameron, at the time a professor at New York University, presented to the party's National Board an unapologetic defense of Stalin. Although many of us were taken aback by his over-the-top apologia, neither I nor anyone else challenged him. It was only after Gus Hall's reluctant exit from his position as party chair in 2000 (at the age of 89) that the atmosphere changed and allowed for a critical look at Stalin, as well as a rethink of the nature of socialism and socialist democracy.

I won't speak for you, Juan, but I was ready to move on at the time. And had been for a while. Actually, not too long after the last rites were administered to the brightest star — the Soviet Union — in the galaxy of socialist states in 1991, I began a process of re-examination of the ideas and practices that had guided me since the 1970s, much of it while riding on a daily commuter train between New York and New Haven where I lived at the time.

In the course of this process, I came to realize that much of my thinking needed either a tune up or a complete overhaul. But to go into this is in any length is beyond the scope of this reply. Here, though, I will mention few things that pertain to our discussion.

First, I came to believe that the gateway to socialism and the realization of its full potential is ineluctably anchored in the broad democratic engagement of millions, in the self-empowerment of formerly subordinate classes and people in every sphere of life, and in substantive democracy and equality at every phase of the revolutionary process.

I also arrived at an understanding, first tentative and now definitive, that our depreciation — at times expunging — of democratic values, practices, and voices in socialist societies wasn't simply a result of the unyielding logic of events and adverse circumstances in Russia and elsewhere. It was also a result of our reduction of democracy to a secondary status relative to class and socialist struggles; our clumsy, undialectical embrace of economic determinism and the base-superstructure model; our distorted reading of Soviet history; our notion of the role of vertically organized and centrally directed "parties of a new type;" and our narrow — no wrongheaded — understanding of power and its dynamics at each phase of the revolutionary process.

Finally, I reached the conclusion that parties and movements of the left and marxism itself, if they are going to retain their vitality, have to be self-reflective and allow for critique of their premises and practices. And this has to be combined with the courage to move in new directions, even where it means going against the grain of long-held understandings and institutional practices.

2. I agree that power and democracy, as you write in your reply to me, should coexist and reinforce one another in socialist society, but I would add this caveat: such a relationship only works when power is rooted in a dense network of democratic institutions, parties, and practices, not to mention subject to legal and constitutional limits on its scope and exercise.

And unfortunately, this wasn't the case in 20th century socialist societies. There the locus of power was in the tight grip of the General Secretary and the Political Bureau of the ruling communist parties.

In these circumstances, power and democracy didn't reinforce each other. In fact, as power became the exclusive franchise of the vanguard parties, popular democracy and civic activism became formalities in nearly all the socialist countries. Rather than democracy and popular participation deepening and expanding, they wilted, even though the outward democratic trappings remained.

In monopolizing power, the party/the communists turned the main creative force of socialist society — the people — into passive spectators and cynical observers. By the end, they became opponents of the existing regimes and of socialism itself.

I do realize that deep-going democratization is not easy, and that it brings considerable tensions, difficulties, and dangers. Robust democracy can be discordant and fractious. It can also become, as you say, a platform for people, parties, and social classes that are bitterly hostile to socialism and democracy.

You cite the example of the so-called "Southern Redeemers," who took advantage of democratic freedoms in the post-Civil-War South, the withdrawal of the Union army, and the use of unspeakable terror to restore themselves to power and institute a new racist order. To this we could add Nixon's electoral "Southern Strategy" that was in large measure a reaction to the civil rights revolution. And then there was the ascendancy of right-wing extremism in the 1980s that was a predictable push back against progressive democratic and cultural shifts as well as economic changes since the end of World War II.

On an international plane, the examples where counterrevolution followed on the heels of socialist advances are legion: Russia, Chile, Venezuela, to name a few.

Nevertheless, the danger of counterrevolution, as real as it is, can't become the rationale to submerge democratic values, structures, and practices until a more propitious moment arrives.

Lenin himself said,

"It would be a fundamental mistake to suppose that the struggle for democracy can divert the proletariat from the socialist revolution, or obscure, or overshadow it, etc. On the contrary, just as socialism cannot be victorious unless it introduces complete democracy [my boldface], so the proletariat will be unable to prepare for victory over the bourgeoisie unless it wages a many-sided, consistent and revolutionary struggle for democracy."

Or to put it differently, democratization is socialism's force multiplier by which people gain new understandings, deepen and extend their unity, and learn to govern a society that prioritizes non-exploitive, egalitarian, nonviolent, ecological, and humanist social relations. But more than that, democratization is the vector through which newly empowered people bring their creative energies and insights to bear on the problems, contradictions, and possibilities of any socialism that hopes to reach higher ground.

The German socialist Rosa Luxemburg famously wrote,

"Socialism in life demands a complete spiritual transformation in the masses degraded by centuries of bourgeois rule … No one knows this better, describes it more penetratingly; repeats it more stubbornly than Lenin. But he is completely mistaken in the means he employs. Decree, dictatorial force of the factory overseer, draconian penalties, rule by terror – all these things are but palliatives. The only way to a rebirth is the school of public life itself, the most unlimited, the broadest democracy and public opinion."

"Without general elections, without unrestricted freedom of press and assembly, without a free struggle of opinion," Luxemburg continued, "life dies out in every public institution, becomes a mere semblance of life, in which only the bureaucracy remains as the active element. Public life gradually falls asleep, a few dozen party leaders of inexhaustible energy and boundless experience direct and rule."

This is not an argument against political parties or capable leaders. But it is an argument for more than one party and for leaders who understand that the art of leading consists in resisting the real pressures to centralize power at various moments of the revolutionary process, while, at the same time, creatively facilitating its decentralization and devolution to people and democratic institutions.

It's an argument for an independent media, regular elections, and the periodic replacement of leaders. It's an argument for the embedding of democracy and egalitarianism in the culture and every sphere of life in socialist society.

It's also an argument for prohibitions on the exercise of unchecked power by governing authorities and individuals, no matter how unimpeachable their socialist pedigree, oratorical talents, and revolutionary credentials.

The abysmal record of the socialist countries on issues of democracy and constitutional rights prompted the following observations by the great British historian, E.P. Thompson:

"I am told that, just beyond the horizon, new forms of working class power are about to arise which, being founded upon egalitarian productive relations, will require no inhibition and can dispense with the negative restrictions of bourgeois legalism. A historian is unqualified to pronounce on such utopian projections. All that he knows is that he can bring in support of them no evidence whatsoever. His advice might be: watch this new power for a century or two before you cut down your hedges." (Whigs and Hunters)

I'm not sure if there are any guarantees that power, whether wrested either all at once or by degrees, will then be decentralized and distributed to democratic institutions, civil society, and people generally. So far there is scant evidence in the historical ledger for such a dynamic. But, by the same token, history doesn't rule it out either.

Frederick Engels presciently wrote in 1895:

" The time of surprise attacks, of revolutions carried through by small conscious minorities at the head of unconscious masses, is past. Where it is a question of a complete transformation of the social organization, the masses themselves must also be in it, must themselves already have grasped what is at stake, what they are going in for with body and soul. The history of the last fifty years has taught us that."

A few decades later, Italian communist leader Antonio Gramsci, writing from a prison cell in fascist Italy argued that millions of people will have to acquire a new "common sense" — a new set of values, sensibilities, and understandings — if they hoped to scale the ramparts of capitalism and build a democratic socialist society. (Prison Notebooks)

If the formation of an aroused and politically astute majority is a necessary condition for effecting a transition to socialism, doesn't it follow, especially in the harsh light of socialism's egregious failures in the late 20th century, that the presence of a majoritarian movement of millions, distinguished by its depth of understanding, democratic sensibility, and sustained activity, remains as vital in the socialist phase of the revolutionary process, if socialism's democratic and liberating potential is to see the light of day.

Who else will be the protagonists for and guardians of democracy at every stage of socialism's development? Who else has the capacity to demand that power be embedded in every crevice of social life? Who else will be able to resist the likely entreaties, usually in the name of short-term expediency and at the urgings of authoritative leaders, to centralize power?

Again, I'm not arguing against leaders and parties. Indeed, both Engels and Gramsci, each in their own way, were insistent that a leadership in the form of a political party of the left, possessing strategic depth, tactical acumen, political creativity, and organic connections to the masses of people, was absolutely necessary.

But "vanguard" parties, as they evolved in the 20th century didn't fit this bill. They were too narrowly constructed — theoretically, politically, organizationally, and culturally. Thus, some other formation or party or movement — call it what you will — constructed on new foundations and embracing new sensibilities is necessary.

What will it look like? The answer to that question will take a larger conversation among today's activists. I will only make a few brief observations:

First, a new formation of the left will make a difference only if it possesses a deep democratic, egalitarian and ecological disposition and distinguishes itself by its commitment to such practices at every phase of struggle.

Class, class struggles, and class power are social categories of great analytical and practical power. And they should figure prominently in the analysis and activity of the left. But they will limp if they claim a singular status that reduces everything else to a subordinate, ancillary role. It is in their dialectical connection and mutual constitution with race, gender, and other social categories and struggles that they acquire their greatest capacity to shed light on questions of theory, strategy, and political program and their maximum power to effect political transformations.

Class-economic populism fails this test. And thus it is no match for an authoritarian president and the right wing generally that traffics heavily in racist (especially anti-black), misogynist, anti-immigrant, and hyper nationalist rhetoric and policies. Nor will it acquit itself any better over the longer term when more radical-democratic-egalitarian strivings and alternatives arise. Anything that takes the struggle against racism, which should be uppermost and constant in the democratic, progressive, and radical mind, out of the field of vision relinguishes its transformative power.

Second, a new formation of the left should operate on the assumption that a militant minority is no substitute for an immense majority. Indeed, only such a majority, energized by democratic and egalitarian as well as class desires, resisting racism, sexism, and other backward ideologies and practices, and resting on the strategic alliance of working people, communities of color — the African American people in the first place — women, immigrants, and young people, has the capacity to turn emancipatory dreams into embedded social realities.

Third, a keen strategic eye that takes into account the actual balance of forces in society and the class and democratic tasks that follow is imperative. While broad abstractions should have a place in any analysis and methodology, they are but the starting point in the elaboration of program, strategy, and tactics. Concreteness is imperative.

Fourth, the revitalization of the labor movement should be high in its priorities, although to think that labor's role in any progressive turn in the near term will mirror labor's role in the people's surge of the 1930s is wishful thinking. Labor's full revitalization, more likely, will come on the heels of an actual political turn in a progressive and left direction.

Fifth, electoral-democratic politics should be figure at the center of its activity. It should reject any suggestion that electoral politics is a lesser-order form of struggle or its counterposition to struggle in the streets. It is hard to envision any movement toward, or transition to socialism in which electoral politics and the electoral path don't play an outsized role.

Sixth, marxism should occupy a prominent, but not exclusive, place in its theoretical activities. And analytical weight should rest on the development of theory and policy in line with new experience, conditions, and challenges. Nor should its theoretical work be a strictly in-house affair; a dialogue with the broader movement would serve everybody well.

Finally, if the left hopes to move into the mainstream and become a major player in U.S. politics, it has to scrub out the sectarian modes of thinking, habits, and practices from its politics and culture. After a half century on the political stage, they deserve a fitting, but immediate burial.

3. I agree, Juan, that the Cuban experience is unique. It is fair to wonder if Cuban socialism could have survived in the face of the relentless pressure from U.S. imperialism without the leadership of Fidel Castro, Raul Castro, and others, not to mention the courage and determination of the Cuban people.

Like you, I consider the extension of economic and social rights to the Cuban people for the first time, the creation of popular, if not perfect, forms of democratic governance, the solidarity extended, time after time, to the people of the global south fighting imperialism, and its overcoming of the special period after the Soviet Union fell extraordinary feats, given the unrelenting pressure on them from the U.S. government.

And also like you, I consider Fidel Castro to be a remarkable and inspirational leader to hundreds of millions worldwide.

And yet it seems to me — and I'm no expert on Cuba — that the Cuban socialist model never fully moved out of its top-down configuration. Perhaps that has begun to change in recent years. At any rate, I don't think that such a model, as I have written above, is in keeping with the desires and sensibilities of people in this century. Something else is necessary — more substantive democracy — if socialism is to measure up to its claims.

4. As we ponder what a transition to socialism might look like in our country, the experience and difficulties of countries like Chile and Venezuela is worth studying, as you mention. In both cases, as you also mention, the political/electoral terrain of struggle was utilized by the left coalitions in both countries. In Chile the socialist oriented government of Salvador Allende was crushed a half century ago and in Venezuela, the movement begun and led by Hugo Chavez, is encountering powerful opposition from within and outside the country — from our government in the first place.

And yet I don't think, and I know you agree, that the utilization of the political/electoral path here should be mothballed because of these difficulties, complexities, and results. In fact, I'm sure we agree that the experiences of both countries reveal not only the difficulties, but also the possibilities of this terrain of struggle. Thus, the challenge is — and I'm sure we're on the same page — to study and learn from this experience so that when the American people begin such a journey we are prepared to negotiate this difficult terrain in our march to a new society.

5. In your observations on the overthrowing of Reconstruction in the South following the Civil War, you note the decision to withdraw federal troops from that region gave the defeated political bloc of former slave owners and its other white allies a clear field to reimpose its bloody, racist rule. I couldn't agree with you more, but I would also add that another factor that contributed to this outcome was an earlier decision by the Congress to limit the democratization process in the war's aftermath.

This limitation of democracy tellingly included the refusal of Congress to legislate radical redistribution of land in the former slave states, as advocated by Thaddeus Stevens and some other radical Republicans. Such a measure would have provided an independent base for a new class of Black and white yeoman farmers. It would also have cut the economic (and political) legs out from under the politically defeated slave holding class and its allies. But the demand for "40 acres and a mule" died stillborn.

What resulted was a new form of debt peonage and servitude that ensnared both former slaves and poor whites into a web of super-exploitation and dependence. And when combined with the withdrawal of the Union army, a rollback of democratic rights, and the unleashing of terror against the Black community, the fate of Reconstruction was sealed and a new order — Jim Crow — was violently born. And for the next 75 years it reigned.


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John Case
Harpers Ferry, WV

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Enlighten Radio Podcasts:Podcast: The Moose Turd Cafe: 10.30.17 Insect Armageddon and a Meuller Omelet

John Case has sent you a link to a blog:



Blog: Enlighten Radio Podcasts
Post: Podcast: The Moose Turd Cafe: 10.30.17 Insect Armageddon and a Meuller Omelet
Link: http://podcasts.enlightenradio.org/2017/10/podcast-moose-turd-cafe-103017-insect.html

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Sunday, October 29, 2017

Enlighten Radio:The Moose Turd Cafe AND The Halloween Poetry Show -- MONDAYS!!

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Blog: Enlighten Radio
Post: The Moose Turd Cafe AND The Halloween Poetry Show -- MONDAYS!!
Link: http://www.enlightenradio.org/2017/10/the-moose-turd-cafe-and-halloween.html

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Paul Krugman: Trump’s Deadly Narcissism



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Paul Krugman: Trump's Deadly Narcissism // Economist's View
http://economistsview.typepad.com/economistsview/2017/09/paul-krugman-trumps-deadly-narcissism.html

"Trump truly is unfit for this or any high office":

Trump's Deadly Narcissism, by Paul Krugman, NY Times: According to a new Quinnipiac poll, a majority of Americans believe that Donald Trump is unfit to be president. That's pretty remarkable. But you have to wonder how much higher the number would be if people really knew what's going on.

For the trouble with Trump isn't just what he's doing, but what he isn't. In his mind, it's all about him — and while he's stroking his fragile ego, basic functions of government are being neglected or worse.

Let's talk about two stories that might seem separate: the deadly neglect of Puerto Rico, and the ongoing sabotage of American health care. What these stories have in common is that millions of Americans are going to suffer, and hundreds if not thousands die, because Trump and his officials are too self-centered to do their jobs.

Start with the disaster in Puerto Rico and the neighboring U.S. Virgin Islands.

When Hurricane Maria struck ... it knocked out power to the whole of Puerto Rico, and it will be months before the electricity comes back. Lack of power can be deadly..., but what's even worse is that ... much of the population still lacks access to drinkable water. How many will die because hospitals can't function, or because of diseases spread by unsafe water? Nobody knows. ...

So have we seen the kind of full-court, all-out relief effort such a catastrophe demands? No. ...

Trump spent days after Maria's strike tweeting about football players. When he finally got around to saying something about Puerto Rico, it was to blame the territory for its own problems.

The impression one gets is of a massively self-centered individual who can't bring himself to focus on other people's needs, even when that's the core of his job.

And then there's health care.

Obamacare repeal has failed again, for the simple reason that Graham-Cassidy, like all the other G.O.P. proposals, was a piece of meanspirited junk. But while the Affordable Care Act survives, the Trump administration is openly trying to sabotage the law's functioning. ...

Why are the Trumpists doing this? ... A.C.A. sabotage is best seen not as a strategy, but as a tantrum. We can't repeal Obamacare? Well, then, we'll screw it up. It's not about achieving any clear goal, but about salving the president's damaged self-esteem.

In short, Trump truly is unfit for this or any high office. And the damage caused by his unfitness will just keep growing.


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Re: [socialist-econ] International evidence shows that low corporate tax rates are not strongly associated with stronger investment

Very important srticle!!  Thanks very much. JOHN!!!

On Oct 29, 2017 7:00 AM, "John Case" <jcase4218@gmail.com> wrote:


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International evidence shows that low corporate tax rates are not strongly associated with stronger investment // Blog | Economic Policy Institute
http://www.epi.org/blog/international-evidence-shows-that-low-corporate-tax-rates-are-not-strongly-associated-with-stronger-investment/

The Trump administration's Council of Economic Advisers (CEA) released a paper last week arguing that cuts in the statutory corporate tax rate would lead to gains in business investment, productivity, and wages. I noted in a piece released yesterday why this was unlikely to be true.

The key piece of evidence the CEA claimed was "highly visible in the data" and showed the wage-boosting effect of corporate tax cuts was simply a graph that showed faster unweighted wage growth in just two years in a set of "low-tax" countries relative to a set of "high-tax" countries. I noted in my paper yesterday why this was so unconvincing: a serious test of this claim would look at corporate tax rate changes (not levels), would look over a longer time-period than four years, and would not allow three countries with a combined national income that is less than 0.4 percent of American national income to drive the results.

But, the CEA report did make me curious if we would see anything "highly visible in the data" linking changes in statutory corporate tax rates to nations' capital stocks. The key theory behind claims that corporate rate cuts will boost wages is the idea that these rate cuts will lead to substantially faster investment in productivity-enhancing plants and equipment, boosting the nation's capital stock and making workers more productive. We can assess the first link in that chain of causation below, asking simply "are lower corporate tax rates associated with a larger capital stock"? Figure A shows a scatterplot of the relationship between the average statutory corporate tax rate between 2000 and 2014 the capital-to-labor ratio in 2014. The hypothesis is that low-tax countries should have attracted more capital investment and hence should have accumulated a large stock of capital relative to their workforce by the end of the period. (The data on capital stocks and employment comes from the Penn World Table 9.0.)

Figure A

As the trendline through the scatter indicates, the relationship actually goes the wrong way—countries with higher corporate tax rates over this period had larger capital stocks by 2014. This positive relationship is not particularly significant, either statistically or economically, but that's largely the point: tax cuts are an extremely weak lever with which to attempt to move capital investment.

Some might argue that looking at the average rate over a 14 year period might hide the fact that some countries went from high rates at the beginning of the period to low rates in the end. In this case, the large change in rates could likely have affected capital investment, but this would be obscured by our long-run averages. This is fair enough—though it highlights once again the CEA report's inappropriate use of averages over a short-run period. But Figure B below shows the change in corporate tax rates versus the growth rate of capital inputs into production (a measure of capital investment used in productivity analysis).

Figure B

Again, the correlation here goes the wrong way for sustaining claims that slashing corporate rates would increase capital investment; countries that saw larger reductions in the statutory rate saw slower growth of capital inputs.

The international evidence presented above just re-confirms what we already know: no binding constraint on American economic growth exists today that would be helped at all by cutting corporate income taxes. Instead, such cuts would simply boost incomes for owners of corporations—a group that is already overwhelmingly among the richest households in America. Promises of gains to investment, productivity and wage growth that will force these tax cuts to trickle down to typical American households are completely empty.


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International evidence shows that low corporate tax rates are not strongly associated with stronger investment



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International evidence shows that low corporate tax rates are not strongly associated with stronger investment // Blog | Economic Policy Institute
http://www.epi.org/blog/international-evidence-shows-that-low-corporate-tax-rates-are-not-strongly-associated-with-stronger-investment/

The Trump administration's Council of Economic Advisers (CEA) released a paper last week arguing that cuts in the statutory corporate tax rate would lead to gains in business investment, productivity, and wages. I noted in a piece released yesterday why this was unlikely to be true.

The key piece of evidence the CEA claimed was "highly visible in the data" and showed the wage-boosting effect of corporate tax cuts was simply a graph that showed faster unweighted wage growth in just two years in a set of "low-tax" countries relative to a set of "high-tax" countries. I noted in my paper yesterday why this was so unconvincing: a serious test of this claim would look at corporate tax rate changes (not levels), would look over a longer time-period than four years, and would not allow three countries with a combined national income that is less than 0.4 percent of American national income to drive the results.

But, the CEA report did make me curious if we would see anything "highly visible in the data" linking changes in statutory corporate tax rates to nations' capital stocks. The key theory behind claims that corporate rate cuts will boost wages is the idea that these rate cuts will lead to substantially faster investment in productivity-enhancing plants and equipment, boosting the nation's capital stock and making workers more productive. We can assess the first link in that chain of causation below, asking simply "are lower corporate tax rates associated with a larger capital stock"? Figure A shows a scatterplot of the relationship between the average statutory corporate tax rate between 2000 and 2014 the capital-to-labor ratio in 2014. The hypothesis is that low-tax countries should have attracted more capital investment and hence should have accumulated a large stock of capital relative to their workforce by the end of the period. (The data on capital stocks and employment comes from the Penn World Table 9.0.)

Figure A

As the trendline through the scatter indicates, the relationship actually goes the wrong way—countries with higher corporate tax rates over this period had larger capital stocks by 2014. This positive relationship is not particularly significant, either statistically or economically, but that's largely the point: tax cuts are an extremely weak lever with which to attempt to move capital investment.

Some might argue that looking at the average rate over a 14 year period might hide the fact that some countries went from high rates at the beginning of the period to low rates in the end. In this case, the large change in rates could likely have affected capital investment, but this would be obscured by our long-run averages. This is fair enough—though it highlights once again the CEA report's inappropriate use of averages over a short-run period. But Figure B below shows the change in corporate tax rates versus the growth rate of capital inputs into production (a measure of capital investment used in productivity analysis).

Figure B

Again, the correlation here goes the wrong way for sustaining claims that slashing corporate rates would increase capital investment; countries that saw larger reductions in the statutory rate saw slower growth of capital inputs.

The international evidence presented above just re-confirms what we already know: no binding constraint on American economic growth exists today that would be helped at all by cutting corporate income taxes. Instead, such cuts would simply boost incomes for owners of corporations—a group that is already overwhelmingly among the richest households in America. Promises of gains to investment, productivity and wage growth that will force these tax cuts to trickle down to typical American households are completely empty.


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Friday, October 27, 2017

Enlighten Radio Podcasts:Podcast: The Moose Turd Cafe-- "No Live Frogs Allowed"

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Blog: Enlighten Radio Podcasts
Post: Podcast: The Moose Turd Cafe-- "No Live Frogs Allowed"
Link: http://podcasts.enlightenradio.org/2017/10/podcast-moose-turd-cafe-no-live-frogs.html

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Thursday, October 26, 2017

Enlighten Radio Podcasts:Podcast: Winners and Losers: Dr Keith Alexander and the 2st Century Humanities Symposium

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Blog: Enlighten Radio Podcasts
Post: Podcast: Winners and Losers: Dr Keith Alexander and the 2st Century Humanities Symposium
Link: http://podcasts.enlightenradio.org/2017/10/podcast-winners-and-losers-dr-keith.html

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Wednesday, October 25, 2017

Wall Street wins big as Senate votes to roll back regulation allowing consumers to sue their banks [feedly]

Wall Street wins big as Senate votes to roll back regulation allowing consumers to sue their banks
https://www.washingtonpost.com/news/wonk/wp/2017/10/24/wall-street-wins-big-as-senate-votes-to-roll-back-regulation-allowing-consumers-to-sue-their-banks/

Vice President Pence cast a tie-breaking vote late Tuesday to block new regulations allowing U.S. consumers to sue their banks, handing Wall Street and other big financial institutions their biggest victory since President Trump's election.

The rules would have cost the industry billions of dollars, according to some estimates. With the Senate's vote, Wall Street is beginning to reap the benefits of the Trump administration focus on rolling back regulations it says are strangling the economy. The vote is also a major rebuke of the Consumer Financial Protection Bureau, which wrote the rules, and has often found itself at odds of Republicans in Congress and the business community.

At issue is the fine print in many of the agreements that consumers sign when they apply for credit cards or bank accounts. These agreements typically require them to settle any disputes they have with the company through arbitration, in which a third party rules on the matter, rather than going to court or joining a class-action lawsuit.


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Workers Abroad Are Catching Up to U.S. Skill Levels [feedly]

Workers Abroad Are Catching Up to U.S. Skill Levels
http://ritholtz.com/2017/10/workers-abroad-catching-u-s-skill-levels-2/

Workers Abroad Are Catching Up to U.S. Skill Levels

This is a pretty fascinating – and surprising — collection of data:

 


Source: Federal Reserve of St. Louis


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Dani Rodrik: Growth without industrialization?

Growth Without Industrialization?

 

Low-income African countries can sustain moderate rates of productivity growth into the future, on the back of steady improvements in human capital and governance. But the evidence suggests that, without manufacturing gains, the growth rates brought about recently by rapid structural change are exceptional and may not last.


CAMBRIDGE – Despite low world prices for the commodities on which they tend to depend, many of the world's poorest economies have been doing well. Sub-Saharan Africa's economic growth has slowed precipitously since 2015, but this reflects specific problems in three of its largest economies (Nigeria, Angola, and South Africa). Ethiopia, Côte d'Ivoire, Tanzania, Senegal, Burkina Faso, and Rwanda are all projected to achieve growth of 6% or higher this year. In Asia, the same is true of India, Myanmar, Bangladesh, Lao PDR, Cambodia, and Vietnam

ext

This is all good news, but it is also puzzling. Developing economies that manage to grow rapidly on a sustained basis without relying on natural-resource booms – as most of these countries have for a decade or more – typically do so through export-oriented industrialization. But few of these countries are experiencing much industrialization. The share of manufacturing in low-income Sub-Saharan countries is broadly stagnant – and in some cases declining. And despite much talk about "Make in India," one of Prime Minister Narendra Modi's catchphrases, the country shows little indication of rapid industrialization.

Manufacturing became a powerful escalator of economic development for low-income countries for three reasons. First, it was relatively easy to absorb technology from abroad and generate high-productivity jobs. Second, manufacturing jobs did not require much skill: farmers could be turned into production workers in factories with little investment in additional training. And, third, manufacturing demand was not constrained by low domestic incomes: production could expand virtually without limit, through exports.

But things have been changing. It is now well documented that manufacturing has become increasingly skill-intensive in recent decades. Along with globalization, this has made it very difficult for newcomers to break into world markets for manufacturing in a big way and replicate the experience of Asia's manufacturing superstars. Except for a handful of exporters, developing economies have been experiencing premature deindustrialization. It seems as if the escalator has been taken away from the lagging countries.

What, then, are we to make of the recent boom in some of the world's poorest countries? Have these countries a discovered a new growth model?

In recent research, Xinshen Diao of the International Food Policy Research Institute, Margaret McMillan of Tufts University, and I have looked at the growth patterns among this new crop of high-performing countries. Our focus is on the patterns of structural change these countries have experienced. We document a couple of paradoxical findings.


Second, rapid structural change in these countries has come at the expense of mostly negative labor productivity growth within non-agricultural sectors. In other words, even though the services that absorbed new employment exhibited relatively high productivity early on, their edge diminished as they expanded. This pattern contrasts sharply with the classic East Asian growth experience (such as in South Korea and China), in which structural change and gains in non-agricultural labor productivity both contributed strongly to overall growth.First, growth-promoting structural change has been significant in the recent experience of low-income countries such as Ethiopia, Malawi, Senegal, and Tanzania, despite the absence of industrialization. Labor has been moving from low-productivity agricultural activities to higher-productivity activities, but the latter are mostly services rather than manufacturing.

The difference seems to be explained by the fact that the expansion of urban, modern sectors in recent high-growth episodes is driven by domestic demand rather than export-oriented industrialization. In particular, the African model appears to be underpinned by positive aggregate demand shocks generated either by transfers from abroad or by productivity growth in agriculture.

In Ethiopia, for example, public investments in irrigation, transport, and power have produced a significant increase in agricultural productivity and incomes. This results in growth-promoting structural change, as increased demand spills over to non-agricultural sectors. But non-agricultural labor productivity is driven down as a by-product, as returns to capital diminish and less productive firms are drawn in.

This is not to downplay the significance of rapid productivity growth in agriculture, the archetypal traditional sector. Our research suggests that agriculture has played a key role in Africa not only on its own account, but also as a driver of growth-increasing structural change. Diversification into non-traditional products and adoption of new production techniques can transform agriculture into a quasi-modern activity.

But there are limits to how far this process can carry the economy. In part because of low income elasticity of demand for agricultural products, outflows of labor from agriculture are an inevitable outcome during the process of development. The labor that is released must be absorbed in modern activities. And if productivity is not growing in these modern sectors, economy-wide growth ultimately will stall. The contribution that the structural-change component can make is necessarily self-limiting if the modern sector does not experience rapid productivity growth on its own.

Low-income African countries can sustain moderate rates of productivity growth into the future, on the back of steady improvements in human capital and governance. Continued convergence with rich-country income levels seems achievable. But the evidence suggests that the growth rates brought about recently by rapid structural change are exceptional and may not last.

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Harpers Ferry, WV

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When econ models potentially mislead, econ profs should say so [feedly]

When econ models potentially mislead, econ profs should say so
http://jaredbernsteinblog.com/when-econ-models-potentially-mislead-econ-profs-should-say-so/

Last week saw an interesting and revealing dustup in the tax debate. President Trump's economic council, headed by Kevin Hassett, released a piece claiming that the proposed corporate tax cut would immediately boost average household income by at least $4,000, a claim that was widely pilloried in the economics community. One of the authors of a paper CEA cited to defend their results claimed that the CEA misinterpreted their paper.

A particularly salient objection was the CEA's claim that the incidence of the corporate tax cut fell not just wholly on workers, but that their aggregate wage gains from the cut would be multiples of the revenue lost. Their paychecks would grow more—a lot more, as much as 500% more!—than the revenues lost to the cut.

That sounds wrong, but as Greg Mankiw points out, the direction of Hassett's result is consistent with a particular economic model (though even Greg's model doesn't get you the magnitudes Hassett claims). Mankiw was not per se defending Hassett, as much as teaching his students how to get a result like Hassett's by imposing standard assumptions common to such models. Greg's explanations, for the record, are lucid and instructive as always.

But, because the model he employs bears little resemblance to reality, his work does not provide information that would help someone answer the key question at hand. That is, Greg answers the question: is there an economic model that might defend Kevin's findings, at least directionally if not their magnitudes? Answer: yes.

Yet, the much more pressing question for people trying to decide if $200 billion a year in corporate tax cuts will help workers is: what's the real-world likelihood that corporate tax cuts will raise workers' wages anywhere near the amount Hassett claims?

As many, including myself, have stressed, the answer to that question is "very low." That's based on both theory and evidence. The historical record is unconvincing regarding corporate cuts leading to wage gains, and in most of the models used by the Joint Tax Committee and CBO, corporate tax cuts that aren't paid for lower GDP (relative to a baseline) and thus over time would reduce wages. Moreover, even if the wage effect ispositive, it is highly unlikely to be large enough to offset the future cuts in benefits (or, less likely, increase in taxes) needed to pay for the plan either now or, more likely, later.

The interesting economics question is why the model predicts such an unrealistic result for the US economy? Which of the assumptions most fail to comport with reality? To the extent that we want to train students to be useful practitioners as opposed to proficient, yet unrealistic, modelers, answering those questions would also provide some real educational value-added.

In this case, the model assumes that the US is a small, open economy such that capital inflows instantaneously fund more investment, such investment immediately boosts productivity, and the benefits of faster productivity immediately accrue to paychecks. The simple model ignores the extent to which these inflows would raise the trade deficit as well as their impact on revenue losses and higher budget deficits.

The model assumes away imperfect competition, which is relevant today as a) monopolistic concentration is an increasing problem, and b) the one thing economists agree on in this space is that in these cases, the benefits of the corporate cut flows to profits and shareholders, not workers, other than maybe some "rent sharing" with high-end workers.

Larry Summers made a great point about this: The modelling of Mankiw and others "illustrate why well-resourced, team-based institutions with a strong culture of attention to detail like the Congressional Budget Office, the GAO, the Joint Tax Committee Staff or the Tax Policy Center are so important." By "detail," I take him to mean an unbiased use of literature (unlike Hassett, who totally cherry-picked), and more important, an historical perspective. As many critics of the White House analysis have shown, corporate tax cuts never come close to the wage impacts Hassett claims and Mankiw's modelling supports. Real modelers analyzing real policy proposals must reference real empirical results, and not just the ones that go their way.

This all points to a bigger problem with contemporary economics, particularly as it is deployed in DC debates. A well-placed, highly-pedigreed economist (Hassett) makes an implausible claim, one that is likely to impose great costs on our fiscal outlook and on those who will ultimately pay the cost of the cuts (likely through spending cuts). Sure enough, his claims can be and are, if not defended, then apparently corroborated, by an economic model, in this case by other highly pedigreed economists.

This is lovely development from the perspective of the politicians and their donors who crave these high-end tax cuts. All they need is some "analysis," regardless of how cherry-picked, and a little backup from other erudite economists saying "under certain conditions, yeah…this could happen."

They—those other erudite economists—shouldn't do that. That is, unless they too have a thumb on the scale, they should be explicit about how applicable the model is to the real world, and whether the assumptions it violates are germane to policy makers (Krugman does so here; Furman here). To do otherwise may seem neutral in the analytic community, but in the hurly-burly of political economy, it's an egregious omission, one with the potential to mislead policy makers and, once the tax cuts fail to generate the result predicted by the model, reduce the trustworthiness of economic analysis.


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CONVERSABLE ECONOMIST:After Incarceration: How Many and Male Labor Force Participation

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Blog: CONVERSABLE ECONOMIST
Post: After Incarceration: How Many and Male Labor Force Participation
Link: http://conversableeconomist.blogspot.com/2017/10/after-incarceration-how-and-male-labor.html

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The Legal Workforce and Agricultural Guestworker Acts would push down wages and labor standards for Americans and immigrants alike [feedly]

The Legal Workforce and Agricultural Guestworker Acts would push down wages and labor standards for Americans and immigrants alike
http://www.epi.org/blog/legal-workforce-agricultural-guestworker-acts-push-down-wages/

From the perspective of immigration and the labor market, perhaps the two worst pieces of proposed legislation that we'll see all year will be considered and marked up in the House Judiciary Committee Committee starting today.

One of the bills is the Legal Workforce Act (H.R. 3711), proposed by Rep. Lamar Smith (R-TX); it would mandate that all U.S. employers use E-Verify, an electronic system used to check if new hires are authorized to be employed in the United States. For a number of reasons, E-Verify is not ready for prime time. First, E-Verify's accuracy rate is simply not good enough. Many authorized workers, including American citizens, would be erroneously flagged as unauthorized if all employers were required to use it. Moreover, Congress has not set up a procedure or process for workers improperly flagged as unauthorized to contest E-Verify findings. Job seekers—including many of the working poor with few resources—would have to visit Social Security Administration and/or Department of Homeland Security offices on their own time and at their own expense to correct an E-Verify error, or else face losing their jobs. And if they lose their job because of a government error, there is no meaningful recourse for them to get reinstated or sue for lost wages.

Furthermore, E-Verify should not be expanded nationwide until the 11 million unauthorized immigrants in the United States—including 8 million unauthorized immigrant workers—are legalized. While E-Verify might make sense someday as a policy option to deter future unauthorized migration, without making necessary improvements or coupling it with a broad legalization, it will do much more harm to low-wage workers than good. Many unauthorized immigrants will begin working off of formal payrolls, making it nearly impossible for them to contribute to payroll taxes and the social safety net, or to file successful compensation claims when they are injured on the job. Expanding E-Verify without legalizing the 8 million employed unauthorized immigrants would leave 5 percent of the labor market even more exploitable and vulnerable to retaliation based on immigration status than they already are, putting downward pressure on labor standards for U.S. workers who are employed alongside unauthorized immigrants.

E-Verify expansion was considered as part of comprehensive immigration reform in 2013, and shouldn't be considered again until Congress is ready to consider major reforms to it and couple it with legalization.

Because E-Verify will upset the business community by pushing millions of undocumented workers into the informal labor market, the E-Verify bill is being considered together in the House Judiciary Committee with a bill that would create a large new guestworker program to replace the undocumented workforce. The "Agricultural Guestworker Act" (AG Act), authored by Judiciary Chairman Rep. Goodlatte (R-VA), will create a new temporary worker program that will allow migrant workers to be employed on temporary, nonimmigrant visas—not just for seasonal jobs in agriculture, but also many year-round jobs that have provided a path to the middle class for millions, including in meat processing and food manufacturing. The AG Act would would create a new "H-2C" work visa program that would start at 450,000 new guestworkers per year, but the cap could increase depending on employer demand, and guestworkers could stay for longer than one year. As a result, Farmworker Justice estimates that as many as 2 million visas could be issued by the second year of the H-2C program's existence—equal to roughly 1.25 percent of the entire U.S. labor force. (That would be in addition to the 1 percent of the workforce that is already made up of guestworkers with limited workplace rights.)

This new program the bill would create won't give H-2C workers equal rights on par with U.S. workers. As part of the program, H-2C workers will be vastly underpaid for their work compared to U.S. workers. Employers will only be required to pay H-2C workers slightly above the minimum wage—115 percent of the minimum wage for most jobs or 150 percent for meat and poultry processing jobs—but the bill contains loopholes that would allow them to pay less. In the 21 states that use the federal minimum wage, 115 percent of the minimum wage means that most H-2Cs will get paid $8.34 per hour, which amounts to $334 per week and $17,347 per year if they work a full 40 hours per week. But H-2C workers have no guarantee that they'll work 40 hours per week, because Rep. Goodlatte included a provision only requiring employers to provide them with 20 hours of work per week. 20 hours of work per week at $8.34 per hour amounts to $167 per week and $8,674 per year.

In addition, hundreds of thousands, if not millions of H-2C workers—nearly all of whom will be earning wages that keep them well below the poverty line—will be required to pay for their own housing. Under the current H-2A guestworker program for temporary and seasonal jobs, guestworkers earn a higher wage than they would under the AG Act, and employers are required to provide housing, in part because migrant workers can't be expected to afford housing on the low wages they're paid (even at the higher wage rates in H-2A). It is nearly impossible for anyone in the United States to afford housing if they earn less than $9,000 per year. Rep. Goodlatte is either oblivious to what it costs to live in the United States or he simply doesn't care that many H-2C guestworker will have no choice but to be homeless.

To add insult to injury, Rep. Goodlatte's bill requires H-2C workers to pay for their own health insurance, but prohibits them from accessing subsidies available to the rest of the public under the Affordable Care Act. For some H-2C workers, their annual earnings won't even be enough to afford the health insurance they're required to purchase.

The AG Act is a bad idea for a number of other reasons too, including permitting employers to attest rather than prove that they couldn't find U.S. workers to fill positions, excluding the Department of Labor from any oversight role, prohibiting federal legal aid money from being used to represent H-2C workers, and prohibiting H-2C workers who suffered workplace abuses from filing lawsuits—instead requiring them to submit legal disputes to mandatory arbitration and for good measure, requiring them to pay half the arbitration costs.

It is obvious to any rational person that the AG Act is a recipe for importing poverty and instituting a new era of legalized slavery in the United States, all so that agricultural employers can save a few bucks on labor costs and have a captive workforce that has no option but to beg for the opportunity to earn a pittance for doing some of the most important and backbreaking work in the country.

The one-two punch of the Legal Workforce Act and the Agricultural Guestworker Act will do more to erode labor standards and push down wages for lesser-skilled workers—both Americans and immigrants—than any other immigration legislation in recent memory. The best way to raise wages through immigration law is to legalize the unauthorized immigrant population and create a more rational, flexible, and data-driven system that ties immigration levels to the needs of the economy—not employer desires for indentured workers.


 -- via my feedly newsfeed

Monday, October 23, 2017

Intergenerational social mobility [feedly]

Intergenerational social mobility
http://understandingsociety.blogspot.com/2017/10/intergenerational-social-mobility.html


A crucial part of social cohesion is the prospect of social mobility across generations. A social order in which individuals are stuck in their social position as a result of the lack of social assets of their parents is one which lacks legitimacy for an important part of its population. (Here are a few earlier posts on social mobility in the United States; linklink.) This observation raises several crucial questions. How do we measure social mobility? What obstacles stand in the way of social mobility for some segments of a given population? And what mechanisms exist to increase the pace of social mobility for a given society?

Raj Chetty and his colleagues have profoundly changed the terrain for social scientists interested in these questions through a striking new approach. Their work is presented on the Equality of Mobility website (link). The map above shows that there are very sizable regional differences in social mobility rates, from the deep south to the plains states and upper midwest.

Of particular interest is the light their research sheds on the role that post-secondary education plays in social mobility. A summary of their findings is presented in an NBER research paper, "Mobility Report Cards: The Role of Colleges in Intergenerational Mobility" (link). Here is a statement of their approach:
We take a step toward answering these questions by using administrative data covering all college students from 1999-2013 to construct publicly available mobility report cards – statistics on students' earnings outcomes and their parents' incomes – for each college in America.1 We use de-identified data from federal income tax returns and the Department of Education to obtain information on college attendance, students' earnings in their early thirties, and their parents' household incomes.2 In our baseline analysis, we focus on children born between 1980 and 1982 – the oldest children whom we can reliably link to parents – and assign children to colleges based on the college they attend most between the ages of 19 and 22. We then show that our results are robust to a range of alternative specifications, such as measuring children's incomes at the household instead of individual level, using alternative definitions of college attendance, and adjusting for differences in local costs of living.
Their research involves linking federal tax returns for two generations of individuals in order to establish the relationship between the parents' income group and the child's income group after college. (The tax data are de-identified so that the privacy of the individuals is protected.) The Equality of Mobility website includes downloadable datasets for the report cards for several thousand post-secondary institutions.

A highlight of this analysis is the very substantial impact on social mobility created by regional public universities.
The colleges that have the highest bottom-to-top-quintile mobility rates – i.e., those that offer both high success rates and low-income access – are typically mid-tier public institutions. For instance, many campuses of the City University of New York (CUNY), certain California State colleges, and several campuses in the University of Texas system have mobility rates above 6%. Certain community colleges, such as Glendale Community College in Los Angeles, also have very high mobility rates; however, a number of other community colleges have very low mobility rates because they have low success rates. Elite private (Ivy-Plus) colleges have an average mobility rate of 2.2%, slightly above the national median: these colleges have the best outcomes but, as discussed above, also have very few students from low-income families. Flagship public institutions have fairly low mobility rates on average (1.7%), as many of them have relatively low rates of access. Mobility rates are not strongly correlated with differences in the distribution of college majors, endowments, instructional expenditures, or other institutional characteristics. This is because the characteristics that correlate positively with children's earnings outcomes (e.g., selectivity or expenditures) correlate negatively with access, leading to little or no correlation with mobility rates. The lack of observable predictors of mobility rates underscores the value of directly examining students' earnings outcomes by college as we do here, but leaves the question of understanding the production and selection technologies used by high-mobility-rate colleges open for future work. (3-4)
These are by and large the institutions that constitute the membership of the American Association of State Colleges and Universities (link). AASCU institutions are distinguished by the commitment that they commonly share to enhancing access for under-serviced members of society, and to contributing to social mobility in the regions and states that they serve. These values are expressed in the American Democracy Project (link). The evidence of the Chetty project appears to validate the achievement of that mission.

There are additional questions that one would like to be able to answer using the kinds of data that Chetty and his colleagues have considered. Central among these have to do with other measures of social mobility. The definition of social mobility in use here is transition from the bottom quintile of income to the top quintile of income in one generation. But it would be illuminating to consider less dramatic social movement as well -- for example, from the bottom quintile to the middle quintile.

This research underlines the critical importance of public higher education in the United States. We need to do a better job of supporting public universities so that the cost of higher education is not so heavily skewed towards tuition revenues. The benefits of public universities are certainly of value to the individual graduates and their families. But the increased social mobility enabled by many public universities also enhances democratic legitimacy at a time when many institutions are under attack.

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