Sunday, November 27, 2016

Trump’s economic plans could cripple government for a generation [feedly]

Trump's economic plans could cripple government for a generation
http://larrysummers.com/2016/11/22/trumps-economic-plans-could-cripple-government-for-a-generation/

Listen to The Axe Files, a podcast with David Axelrod, about growing up in a family of renowned economists, what did and did not cause the financial crisis in 2008, and the economic implications of Trump's policy proposals.

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Take the first train to Factville… [feedly]

Take the first train to Factville…
http://jaredbernsteinblog.com/take-the-first-train-to-factville/

Since Donald Trump's upset election, I've had a unique and odd experience, one peculiar to D.C. I've participated in a number of events — conferences, dinners, panels — that were planned before the election and predicated on a different outcome. To say the mood is somber at these events is an understatement.

What has been particularly discordant is to hear policy types, myself included, discuss what we need to do going forward. These include ideas to prolong the economic recovery and help ensure that it reaches more people. Also, there's a recession out there somewhere, and we're not ready for it, so good ideas abound regarding preparations that Congress should undertake now while the sun's still shining. Other ideas include some of the best parts of Hillary Clinton's agenda, including ways to help people balance work and family, pay for college, improve the Affordable Care Act, and to push back on economic discrimination by race and gender.

When I hear myself and my colleagues make these arguments, I feel as if we're leading a parade but have neglected to turn around and see the thin crowd that's following us.

That is, of course, an exaggeration. Clinton won the popular vote by more than 1 percent and counting. But those of us in the facts business must at least consider how little our work seemed to penetrate in the months leading up to the election.

Already, many of us progressives have dusted ourselves off and gone right back to work, promulgating more facts and policy arguments. That's necessary and increasingly important, as the Trump team is generating policies that sound good but are wasteful and inefficient. We're used to playing such defense, and we're good at it.

But if that's all we do, we'll be failing the people whom we're here to help. The problem isn't that the facts aren't out there; it's that they don't seem to be gaining much traction. Moreover, there is no way an $18.7 trillion economy can be successfully managed if facts are on the run. We either solve this problem or watch our country deteriorate.

So how do we find and successfully navigate the road back to Factville?

We can gain an important hint by looking at what hasn't worked. Many in the real media (as opposed to the "alt-right") responded, often admirably, with fact checking, even in real time, as during the presidential debates. But listen to what Major Garrett, from CBS news, said about this on the Diane Rehm radio show the other day, incisively summarizing his experiences on the campaign trail:

"Any fact-checking I did … was prima facie evidence that I was biased and that I was wrong. Fact checking Trump was proof not that he was wrong but that he was right and that anyone who would raise a question about the underlying relationship about what he said and the facts was biased and therefore legitimately disregarded … It wasn't as if there was a conversation about this; it wasn't as if facts were litigated back and forth. The very raising of a question about the factual basis of a Trump assertion was proof that you were wrong and biased and that was the atmosphere that I found myself existing in as a reporter and to call it challenging would be an understatement."

The institution of the establishment media is, in other words, not trusted by partisans who can point and click to countless other places to find "facts" that meet their priors. It's a brilliant opposition strategy: when the act of fact-checking itself signals to partisans that you're biased, that's checkmate against evidence.

Next, ask yourself who benefits from the absence of evidence-based analysis? Examples are useful here. I can show, using the work of the think-tankers I've mentioned thus far that the social insurance programs of Medicare and Social Security are highly efficient and effective in boosting the welfare of retirees, and that there are no such private systems that would be nearly as effective. I can show the same societal-wide net benefits for the Affordable Care Act and the anti-poverty safety net. Same for countercyclical policy to offset recessions. Same for public education, from quality preschool to affordable college.

Every one of these programs is a "public good" and thus adds to the role of the government and requires ample funding provided through tax revenue. So, if you're someone who wants to keep more of your pretax income, you must discredit such programs and the government that provides them.

I see this play unfolding as we speak: One, discredit the facts so nobody knows what works and what doesn't. Two, pass a massive tax cut that delivers the goods to the top few percent. Three, argue, based on #1 above, that the tax cuts will generate enough growth to pay for themselves. Four, when they fail to do so and the debt starts going through the roof, throw up your hands and say you've got to cut the "entitlements."

I don't profess to know how to break this chain, but I do know this: Bringing the best ideas to fruition, where "best" means those that promote the greatest social welfare, does not depend solely on logic, numbers and the best arguments.

First, both the media and allegedly centrist policy organizations need to retire the idea that pairing fact-based analysis with unfounded bias is balanced reporting. Why should there be a debate on whether trickle-down tax cuts can double the growth rate and pay for themselves? And, yet, I'm called upon to have that debate weekly. If they can get you arguing over the wrong questions, they've already won.

At the very least, the media should mitigate the damage by making debates more representative of the state of knowledge on an issue — meaning, as John Oliver has pointed out, that climate change debates should generally feature 97 scientists explaining that it's real and a problem for every three people who deny that reality.

Second, we in the think tank world need to reach beyond the choir both in our policy and our communications. I can name many think tanks that work with great energy and notable successes on the problem of poverty. I cannot say the same for the problem of helping displaced manufacturing workers.

Third, we must call it like we see it with much more intensity. I wonder if one reason the progressive base wasn't out in force was in part because we failed to explain the stakes in clear, powerful language, naming names and directly confronting falsehoods and racism.

Fourth, and relatedly, we need to be more proactive in working with and supporting advocates and social movements. The Fight For $15, the Fed Up Campaign and Black Lives Matter are examples in recent years of people coming together to pressure politicians to act. They've been successful because they haven't stopped at the facts; instead, they take the facts and integrate them with people-power and a compelling moral message.

I'm sure there are more and better ideas to reestablish facts and evidence-based policy to their necessary perch. Like I said, I'm no expert in this space: When my colleagues and I were in graduate school, we studied facts, not how to reinject them into the debate. But unless we do so and couple them with progressive political movements, I fear we may make no progress.


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After 15 Years of War on Terror, Are We any Safer? [feedly]

After 15 Years of War on Terror, Are We any Safer?
http://www.globalpolicyjournal.com/blog/21/11/2016/after-15-years-war-terror-are-we-any-safer

After 15 Years of War on Terror, Are We any Safer?

Parag Khanna and Robert Muggah - 21st November 2016
 
Today's cities face a multiplicity of threats. Terrorism is just one of them, and not even the most alarming.

The 9/11 attacks on New York City and Washington were devastating, including for dozens of countries and cities outside the US. The subsequent invasions of Afghanistan and Iraq, and the prolonged global war on terror set off a complex chain reaction of destabilization across Africa, Central Asia and the Middle East. They also triggered violent ripple effects stretching from North America and Europe to Southeast Asia. Few singular acts have so fundamentally swayed the arc of history.
 
Fifteen years on, rather than feeling safer, there is a palatable feeling that terrorism is out of control. High-profile attacks by extremists on major cities across Belgium, France, Lebanon, Turkey and the US have set the world on edge. While some of the attackers are home-grown and their grievances partially local, their stated motivations are almost always traced back to interlocking crises in the greater Middle East. Commentators talk ominously of a new kind of world war spanning the entire globe. Populists are calling for the closing of national borders to keep "would-be" terrorists at bay.

A new type of war
 
This new guerrilla-style war is not being waged by conventional forces, but rather by drones and counter-terrorism forces on the one side and a shifting constellation of organizations such as ISIS, Al Qaeda, Boko Haram and Al Shabaab on the other. The latter's methods are highly decentralized, networked and asymmetric. Targets are not restricted to specific population groups or even symbolic sites as in the past. Rather, the goal of groups such as ISIS is to lay siege to cities, effectively shutting them down for as long as possible.
 
While publicly available statistics are patchy, it is undeniable that terrorist violence is on the rise. More than 32,700 people were killed as a result of terrorism in 2014, 80% more than the previous year. The latest reports suggest that more than 28,000 people died during terrorist events in 2015 and that a similar number will likely be killed in 2016. There is a wary resignation that attacks are inevitable in the West: it is not so much whether there will be another attack on a major global city, but where, when and how big.
 
Looking beyond the headlines
 
But are European and American cities really the new frontline of a global jihad? More controversially, is terrorism really the key risk contributing to fragility in cities in the 21st century? One way to answer the question is to consider the numbers. This is not as clear-cut as it sounds. The reliability and coverage of data on lethal violence is mixed, but statistics on violence in cities is an important indicator of actual and future risk. Seen this way, Brussels, Paris, London, Nice and New York are outliers when it comes to terrorism. As horrific as the attacks on these cities may be, they are highly unusual events.
 
The Global Terrorism Database and other reports issued by the US State Department have issued remarkably consistent findings over the past few decades. The vast majority of terrorist incidents are a function of hyper local political grievances in a small number of countries. In fact, less than 3% of terrorist-related killings occurred in the West over the past 15 years. The past several years have been no different, with an overwhelming number of victims concentrated in a handful of cities in Afghanistan, Iraq, Nigeria, Pakistan, Somalia and Syria.
 
The extent of terrorist violence in these six countries is breathtaking. They are home to the world's 20 most heavily targeted cities over the past four years.
 
 
 
 
A review of terrorism in over 2,100 cities revealed that violent death rates (per 100,000) were well above those one might expect in a war zone. Major urban centres like Baghdad, Karachi and Mogadishu stand out. But it's unlikely you've ever heard of most of the others.
 
Predictably, most terrorist killings target densely populated areas, especially markets, bus stations and public buildings in cities.
 
However, a breakdown of the terrorism statistics suggests that it is not solely an urban phenomenon, much less one restricted to large cities. It is also a function of the extent of urbanization in a given country and, just as important, terrorist tactics, which vary from place to place. In Iraq, slightly less than 50% of terrorist killings occur in cities of over 250,000 people. In Syria, the proportion is 70%. Meanwhile, in Afghanistan the ratio is just 10% urban, while it falls to 8% in India.
 
It's not just terrorism we should be worrying about

While there are justifiable concerns with terrorism, it is worth noting that it is not the only – or even the most significant – cause of violent death around the world.
 
Terrorist-related deaths pale in comparison to the scope and scale of homicidal violence in cities. Between 400,000 and 500,000 people are murdered every year, at least 10 times the number dying as a result of terrorism. Though terrorist-related events spiked in some Western cities over the past two years, vastly more people are at risk of murder. This is especially the case for young men, for whom homicide is still one of the greatest threats to life.
 
As in the case of terrorism, there are a number of hot spots where urban homicide is especially prolific.
 
 
 
 
 
 
Latin America and the Caribbean, for example, is home to just 8% of the world's population, but registers 33% of its homicides. At the city scale, residents of cities in Brazil, the Democratic Republic of the Congo, Colombia, El Salvador, Guatemala, Honduras, Jamaica, Mexico, South Africa, Trinidad and Tobago and Venezuela are most at risk. An astonishing 47 of the 50 most homicidal cities in the world are located in Latin America.
 
What it all means
 
So what are some of the wider implications of this morbid retreat into the data of violent death? At the outset, it is a reminder that a comparatively modest number of countries (and cities) are dramatically more at risk of terrorist and homicidal violence than others. Clearly, greater investment in diplomacy, crisis management and conflict prevention is urgently needed, alongside improved intelligence sharing within and between cities. This would certainly be more cost-effective – both economically and in terms of live saved – than hardening potential targets from asymmetric attacks in Western cities.
 
Perhaps even more important, the data shows that homicidal violence is a much larger problem than terrorism. What is more, it is just a handful of cities – most of them in Latin America, the Caribbean and parts of Africa – that account for the lion's share of murders globally. If lethal violence is to be reduced in these areas, the issue must be prioritized by national and municipal authorities, with a focus on driving down inequality, concentrated poverty, youth unemployment and of course corruption and political and criminal impunity. Doubling down on the world's most violent cities could do much to drive down the global burden of violent death.
 
In the end, it is important to recall that the threats of urban fragility are broader than a narrow focus on the prevalence of lethal violence. If cities are to become more resilient – to cope, adapt and rebound in the face of shocks and stresses – they will need to contend with a wide range of threats, not just terrorism and homicide. This is as much about promoting good governance as reducing structural social and economic risks in cities that give rise to extremism and murder. At the very least, it implies rethinking the role of cities as not just a site of violence but a primary driver of security in our time.
 

 
Parag Khanna, Senior Research Fellow, Lee Kuan Yew School of Public Policy, National University of Singapore. Robert Muggah, Research Director, Igarapé Institute. The article first appeared on The World Economic Forum.

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Case, and Crooked Timber: Castro is dead [feedly]

On Fidel Castro:

Below is a pretty respectable presente! for Fidel, coming from a non-Lefty.

What was Fidel's lasting achievement for Cuba? Independence,

But what about this quote from below: "...of course it is true that Castro ran a dictatorship that has, since 1959, committed its fair share of crimes, repressions, and denials of democratic rights."

Dr King once said, in reference to leadership qualities in a revolutionary movement, "have a tough mind, and a tender heart".

Tough mindedness includes avoiding foolishness that costs lives and victory.

For example, if you are not willing to decisively resist scabs and strikebreakers, do NOT waste your time going on strike.

If you are George Washington or Benjamin Franklin, and  wage a revolutionary struggle against a colonial or imperial power, then you must suppress and un-empower the overthrown regime. Otherwise, do not bother making the revolution: it will fail, and you will be hanged.

If your democracy is under armed and unbridgeable assaults from a counter-revolutionary force, such as the Confederacy, then you must suppress the rights, a la Lincoln and habeas corpus, and indeed, the lives, of the counter-revolutionary force, or your "democracy" will be meaningless.

The leadership of the Cuban revolution against the US and Mafia worm Batista had no privilege of "open democracy", at least in the early years if its independence. These pressures also motivated Cuba's alliance with the USSR, forcing a global confrontation over the prerogatives of overthrown Imperial regimes.

Cuba paid a serious price for its heroic independence, although no one has made a convincing case that there was any alternative: the Soviet economic model did not spur overall economic growth. Neither did the decade of strategies after the collapse of the USSR generate serious growth.  The best that can be said of Cuban Socialism from an economic standpoint is that a) it preserved Cuba's independence -- that actually is an economic as well as political argument; b) it inspired  global anti-imperial movements for independence; c) it made for a more equal, and healthier,  population. 

But it remains in the poorer  third of the world's nations.  All revolutionary movements share some common features. Not all socialisms, however, do. Cuban Socialism is NOT a model for US socialism. Yet like Cuba, US socialism  may have features that CHOOSE US , rather than US CHOOSING them.

Castro is dead
http://crookedtimber.org/2016/11/26/castro-is-dead/

Fidel Castro is dead at 90, so let me adapt some words I wrote when he retired back in 2008. Doubtless, there will be commentary, particularly from within the United States, that is unbalanced and hostile, and, of course it is true that Castro ran a dictatorship that has, since 1959, committed its fair share of crimes, repressions, and denials of democratic rights. Still, I'm reminded of the historian A.J.P. Taylor writing somewhere or other that what the capitalists and their lackeys really really hated about Soviet Russia was not its tyrannical nature but the fact that there was a whole chunk of the earth's surface where they were no longer able to operate. The same thing goes Cuba, for a much smaller area, and it hurt them particularly to be excluded from somewhere that plutocrats and mobsters had once enjoyed as their private playground. (Other countries, far more repressive, got a pass from successive US administrations.) So let's hear it for universal literacy and decent standards of health care. Let's hear it for the Cubans who help defeat the South Africans and their allies in Angola and thereby prepared the end of apartheid at a time when the United States favoured "constructive engagement" with white supremacy. Let's hear it for the middle-aged Cuban construction workers who bravely held off the US forces for a while when the US invaded Grenada. Let's hear it for more than half-a-century of defiance in the face of the US blockade. Hasta la victoria siempre!

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The Republican Deficit Hawks Abandon Their Religion [feedly]

The Republican Deficit Hawks Abandon Their Religion
http://cepr.net/publications/op-eds-columns/the-republican-deficit-hawks-abandon-their-religion


The Republican Deficit Hawks Abandon Their Religion

Dean Baker
Truthout, November 21, 2016

See article on original site

Remember all those times the Republicans in Congress shut down the government and threatened to default on the debt? The ostensible cause was the out of control deficit. Back in the day when President Obama was drafting the budget, these Republicans were arguing that the national debt threatened the well-being of our children and grandchildren. They claimed to view deficit reduction as a sacred cause.

Well, we're about to see a religious conversion of world historic size as the Republican Party, and its congressional leader Paul Ryan, convert from deficit hawks to big spenders. With Donald Trump in the White House, we're going to discover that they think large deficits are just fine.

The basic story is straightforward. Trump has promised both an infrastructure program and large tax cuts which will primarily benefit the rich. On some days he has also promised big increases in military spending, but it's not clear where this commitment stands.

In any case, he is talking about substantial increases in spending and a large cut in revenue. According to the analysis of the Tax Policy Center at the Brookings Institution and the Urban Institute, his tax plan will reduce revenue by more than $9 trillion (close to 4 percent of GDP) over the course of the next decade. This tax cut plan would effectively add close to $800 billion to the annual deficit when it first takes effect, with the amount increasing over time.

While the plan that gets submitted to Congress may look somewhat different than what Trump proposed in his campaign, there is no doubt that it will lead to a large increase in the size of the budget deficit. Under their former faith in balanced budgets, Speaker Ryan and his Republican caucus would be expected to strongly oppose this massive increase in budget deficits.

But there is an important difference between the origins of the Trump deficit and the deficits the Republicans fought under President Obama. While the cuts sought by the Republicans targeted programs that benefited large segments of the US population, according to the Tax Policy Center, more than half of Trump's tax cuts will go to the richest 1 percent of the population. The richest 0.1 percent will get tax cuts that average almost $1.5 million annually.

The Trump tax cut is consistent with the fundamental principle of the Republican Party, and unfortunately many Democrats, of putting as much money as possible in the pockets of the rich. In this context, a budget deficit of any size is no big deal. We saw that under President Reagan, the second President Bush and now under Donald Trump.

We can be sure that the Republicans will deny that their tax cuts will lead to large deficits, claiming that they will be offset by faster growth. In economics, this is called "lying." There is a massive amount of research on this point. There is no reason to believe that the incentives created by lower tax rates will have a substantial impact on savings, investment or work.

When he was head of the Congressional Budget Office, Douglas Holtz-Eakin, a conservative economist who has advised many Republican candidates, did a study of the possible effects of tax cuts on growth. Analyzing a wide range of models he found that additional growth could at best reclaim a small fraction of the revenue lost to the tax cuts. In many of the models the tax cuts actually reduced growth, adding further to the deficit.

In addition to this sort of modeling exercise, we actually did this experiment, twice. In 1981, President Reagan cut income taxes sharply and the deficit soared. In 2001 the second President Bush sharply reduced taxes and the deficit soared.

In short, there is zero reason to think that additional growth from tax cuts will offset the lost revenue to any noticeably effect. We know this based on both careful economic research and two real world experiments. This means when our Republican deficit hawks claim that their tax cuts for the rich won't add to the deficit because of the additional growth they will produce, they know they are not telling the truth.

As I've written many times, the additional stimulus to the economy provided by Trump's tax and spending plans may actually be a good thing, even if the composition of the spending and the targeting of the tax cuts is really bad. We need larger deficits to allow the economy to reach its potential and to get closer to full employment. This is what I've argued for years.

But the Republican deficit hawks have been saying the exact opposite. When it comes to giving tax dollars to the rich, they no longer care about deficits. It would be nice if the media called attention to the incredible hypocrisy of Speaker Ryan and the Republican caucus. Maybe they could take away a little time from covering Hillary Clinton's emails.


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Tim Duy On Krugman And The Working Class [feedly]

NOTE -- Apologies for not posting Krugman's complete column -- but the NYT is now blocking, or making laborious, copying text content. The links to his article are in Tim Duy's review below.

On Krugman And The Working Class
http://economistsview.typepad.com/economistsview/2016/11/on-krugman-and-the-working-class.html



Tim Duy:

On Krugman And The Working Class, by Tim Duy: Paul Krugman on the election:

The only way to make sense of what happened is to see the vote as an expression of, well, identity politics — some combination of white resentment at what voters see as favoritism toward nonwhites (even though it isn't) and anger on the part of the less educated at liberal elites whom they imagine look down on them.

To be honest, I don't fully understand this resentment.

To not understand this resentment is to pretend this never happened:

"You know, to just be grossly generalistic, you could put half of Trump's supporters into what I call the basket of deplorables. Right?" she said to applause and laughter. "The racist, sexist, homophobic, xenophobic, Islamaphobic — you name it. And unfortunately there are people like that. And he has lifted them up."

Clinton effectively wrote off nearly half the country at that point. Where was the liberal outrage at this gross generalization? Nowhere – because Clinton's supporters believed this to be largely true. The white working class had already been written off. Hence the applause and laughter.

In hindsight, I wonder if the election was probably over right then and there.

Krugman continues:

In particular, I don't know why imagined liberal disdain inspires so much more anger than the very real disdain of conservatives who see the poverty of places like eastern Kentucky as a sign of the personal and moral inadequacy of their residents.

But they do know the disdain of conservatives. Clinton followed right along the path of former Presidential candidate Mitt Romney:

It was the characterization of "half of Trump's supporters" on Friday that struck some Republicans as similar to the damning "47 percent" remark made by their own nominee, Mitt Romney, in his 2012 campaign against President Obama. At a private fund-raiser Mr. Romney, who Democrats had already sought to portray as a cold corporate titan, said 47 percent of voters were "dependent upon government, who believe that they are victims" and who "pay no income tax."

There was, of course, liberal outrage at Romney.

Krugman forgets that Trump was not the choice of mainstream Republicans. Trump's base overthrew the mainstream – they felt the disdain of mainstream Republicans just as they felt the disdain of the Democrats, and returned the favor.

I doubt very much that these voters are looking for the left's paternalistic attitude:

One thing is clear, however: Democrats have to figure out why the white working class just voted overwhelmingly against its own economic interests, not pretend that a bit more populism would solve the problem.

That Krugman can wonder at the source of the disdain felt toward the liberal elite while lecturing Trump's voters on their own self-interest is really quite remarkable.

I don't know that the white working class voted against their economic interest. I don't pretend that I can define their preferences with such accuracy. Maybe they did. But the working class may reasonably believe that neither party offers them an economic solution. The Republicans are the party of the rich; the Democrats are the party of the rich and poor. Those in between have no place.

That sense of hopelessness would be justifiably acute in rural areas. Economic development is hard work in the best of circumstances; across the sparsely populated vastness of rural America, it is virtually impossible. The victories are – and will continue to be – few and far between.

The tough reality of economic development is that it will always be easier to move people to jobs than the jobs to people. Which is akin to telling many, many voters the only way possible way they can live an even modest lifestyle is to abandon their roots for the uniformity of urban life. They must sacrifice their identities to survive. You will be assimilated. Resistance is futile. Follow the Brooklyn hipsters to the Promised Land.

This is a bitter pill for many to swallow. To just sit back and accept the collapse of your communities. And I suspect the white working class resents being told to swallow that pill when the Democrats eagerly celebrate the identities of everyone else.

And it is an especially difficult pill given that the decline was forced upon the white working class; it was not a choice of their own making. The tsunami of globalization washed over them with nary a concern on the part of the political class. To be sure, in many ways it was inevitable, just as was the march of technology that had been eating away at manufacturing jobs for decades. But the damage was intensified by trade deals that lacked sufficient redistributive policies. And to add insult to injury, the speed of decline was hastened further by the refusal of the US Treasury to express concern about currency manipulation twenty years ago. Then came the housing crash and the ensuing humiliation of the foreclosure crisis.

The subsequent impact on the white working class – the poverty, the opioid epidemic, the rising death rates – are well documented. An environment that serves as fertile breeding ground for resentment, hatred and racism, a desire to strike back at someone, anyone, simply to feel some control, to be recognized. Hence Trump.

Is there a way forward for Democrats? One strategy is to do nothing and hope that the fast growing Sunbelt shifts the electoral map in their favor. Not entirely unreasonable. Maybe even the white working class turns on Trump when it becomes evident that he has no better plan for the white working class than anyone else (then again maybe he skates by with a few small but high profile wins). But who do they turn to next?

And how long will a "hold the course" strategy take? One more election cycle? Or ten? How much damage to our institutions will occur as a result? Can the Democrats afford the time? Or should they find a new standard bearer that can win the Sunbelt states and bridge the divide with the white working class? I tend to think the latter strategy has the higher likelihood of success. But to pursue such a strategy, the liberal elite might find it necessary to learn some humility. Lecturing the white working class on their own self-interest hasn't worked in the past, and I don't see how it will work in the future.


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