Tuesday, December 12, 2017

In defence of the labour theory of value [feedly]

In defence of the labour theory of value
http://stumblingandmumbling.typepad.com/stumbling_and_mumbling/2017/12/in-defence-of-the-labour-theory-of-value.html

Lucius has been poorly recently, which has required some trips to the vet and therefore a bill of a size that only David Davis could negotiate*. This has made me wonder: is there more to be said for the labour theory of value than we like to think?

For a long time, I've not really cared about this theory one way or the other. This is partly because I've not bothered much with questions of value; partly because, as John Roemer has shown, we don't need (pdf) a labour theory of value to suggest workers are exploited; and partly because the main Marxian charges against capitalism – for example that it entails relationships of domination – hold true (or not!) independently of the theory.

As I approach retirement, however, I've begun to change my mind. I think of major expenses in terms of labour-time because they mean I have to work longer. A trip to the vet is an extra fortnight of work; a good guitar an extra month, a car an extra year, and so on.

When I consider my spending, I ask: what must I give up in order to get that? And the answer is my time and freedom. My labour-time is the measure of value.

This is a reasonable basis for the claim that workers are exploited. To buy a bundle of goods and services, we must work a number of hours a week. But taking all workers together, the hours we work are greater than the hours needed to produce those bundles because we must also work to provide a profit for the capitalist. As Marx put it:

We have seen that the labourer, during one portion of the labour-process, produces only the value of his labour-power, that is, the value of his means of subsistence…During the second period of the labour-process, that in which his labour is no longer necessary labour, the workman, it is true, labours, expends labour-power; but his labour, being no longer necessary labour, he creates no value for himself. He creates surplus-value which, for the capitalist, has all the charms of a creation out of nothing. This portion of the working-day, I name surplus labour-time.

For Marx, value was socially-necessary labour time: David Harvey is good on this.

From this perspective, exploitation and alienation are linked. Workers are exploited because they must work longer than necessary to get their consumption bundle. And they are alienated because this work is unsatisfying and a source of unfreedom.

Now, I'll concede that many people hate the labour theory of value. One reason for this is that many discussions of it quickly become obscurantist – as if "value" is some mystical entity embodied in commodities.

This, though, certainly was not Marx's intention. Quite the opposite. He intended his theory to be a demystification. He wanted to show how what looked like relations between things – the exchange of money for goods or labour-time – were in fact relations between people. And unequal ones at that.

What's more, the charge of obscurantism against Marx is an especially weak one when it comes from orthodox economics. Much of this invokes unobservable concepts such as the natural rate of unemployment, marginal productivity, utility, the marginal product of capital and natural rate of interest – ideas which, in the last two cases, might not even be theoretically coherent.

In fact, the LTV is reasonably successful by the standards of conventional economics: we have empirical evidence to suggest that it does (pdf) a decent (pdf) job of explaining (pdf)relative prices – not that this was how Marx intended it to be used.

You can of course, think of counter-examples to the theory. But so what? in the social sciences, no substantial theory is 100% true.

I suspect that some of the animosity to Marx's use of LTV arises because of a resistance to the inference that Marx drew from it – that workers are exploited. This issue, however, is independent of the validity of not of the LTV. For example, Roemer thinks workers are exploited without believing in the LTV, and Smith believed the LTV without arguing that workers were exploited.

By the (low) standards of economic theories, perhaps the LTV isn't so bad.

* He seems to be recovering now. The vet is also expected to make a full recovery eventually.


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YANIS VAROUFAKIS: The High Cost of Denying Class War [feedly]

The High Cost of Denying Class War
https://www.project-syndicate.org/commentary/class-warfare-fuels-trump-and-brexit-by-yanis-varoufakis-2017-12

The rise of populism on both sides of the Atlantic is being investigated psychoanalytically, culturally, anthropologically, aesthetically, and of course in terms of identity politics. The only angle left unexplored is the one that holds the key to understanding what is going on: the unceasing class war waged against the poor since the late 1970s.

ATHENS – The Anglosphere's political atmosphere is thick with bourgeois outrage. In the United States, the so-called liberal establishment is convinced it was robbed by an insurgency of "deplorables" weaponized by Vladimir Putin's hackers and Facebook's sinister inner workings. In Britain, too, an incensed bourgeoisie are pinching themselves that support for leaving the European Union in favor of an inglorious isolation remains undented, despite a process that can only be described as a dog's Brexit.

In 2016, the year of both Brexit and Trump, two pieces of data, dutifully neglected by the shrewdest of establishment analysts, told the story. In the United States, more than half of American families did not qualify, according to Federal Reserve data, to take out a loan that would allow them to buy the cheapest car for sale (the Nissan Versa sedan, priced at $12,825). Meanwhile, in the United Kingdom, over 40% of families relied on either credit or food banks to feed themselves and cover basic needs.The range of analysis is staggering. The rise of militant parochialism on both sides of the Atlantic is being investigated from every angle imaginable: psychoanalytically, culturally, anthropologically, aesthetically, and of course in terms of identity politics. The only angle that is left largely unexplored is the one that holds the key to understanding what is going on: the unceasing class war unleashed upon the poor since the late 1970s.

William of Ockham, the fourteenth-century British philosopher, famously postulated that, when bamboozled in the face of competing explanations, we ought to opt for the one with the fewest assumptions and the greatest simplicity. For all the deftness of establishment commentators in the US and Britain, they seem to have neglected this principle.

Loath to recognize the intensified class war, they bang on interminably with conspiracy theories about Russian influence, spontaneous bursts of misogyny, the tide of migrants, the rise of the machines, and so on. While all of these fears are highly correlated with the militant parochialism fueling Trump and Brexit, they are only tangential to the deeper cause – class war against the poor – alluded to by the car affordability data in the US and the credit-dependence of much of Britain's population.2

True, some relatively affluent middle-class voters also supported Trump and Brexit. But much of that support rode on the coattails of the fear caused by observing the classes just below theirs plunge into despair and loathing, while their own children's prospects dimmed.

Twenty years ago, the same liberal commentators were cultivating the impossible dream that globalizing financialized capitalism would deliver prosperity for most. At a time when capital was becoming more concentrated on a global scale, and more militant against non-owners of assets, they were declaring the class war over. As the working class was growing in size worldwide, even though its jobs and employment prospects were shrinking in the Anglosphere, these elites behaved as if class were passé.1

The 2008 financial collapse and the subsequent Great Recession buried that dream. Still, liberals ignored the undeniable fact that the gigantic losses incurred by the quasi-criminal financial sector were cynically transferred onto the shoulders of a working class they thought no longer mattered.

For all their self-image as progressives, the elites' readiness to ignore widening class divisions, and to replace it with class-blind identity politics, was the greatest gift to toxic populism. In Britain, the Labour Party (under Tony BlairGordon Brown, and Edward Miliband) was too coy even to mention the post-2008 intensification of the class war against the majority, leading to the rise across the Labour heartland of the UK Independence Party (UKIP), with its Brexit parochialism.

Polite society seemed not to give a damn that it had become easier to get into Harvard or Cambridge if you were black than if you were poor. They deliberately ignored that identity politics can be as divisive as apartheid if allowed to act as a lever for overlooking class conflict.

Trump had no compunction to speak clearly about class, and to embrace – however deceitfully – those too poor to buy a car, let alone send their children to Harvard. Brexiteers, too, embraced the "great unwashed," reflected in images of UKIP leader Nigel Farage drinking in pubs with "average blokes." And when large swaths of the working class turned against the establishment's favorite sons and daughters (the Clintons, the Bushes, the Blairs, and the Camerons), endorsing militant parochialism, the commentariat blamed the riffraff's illusions about capitalism.

But it was not illusions about capitalism that led to the discontent that fueled Trump and Brexit. Rather, it is the disillusion with middle-of-the-road politics of the kind that intensified the class war against them.

Predictably, the embrace of the working class by Trump and the Brexiteers was always going to arm them with electoral power that, sooner or later, would be deployed against working-class interests and, of course, minorities – always the penchant of populism in power, from the 1930s to today. Trump has thus used his working-class support to usher in scandalous tax reforms, whose naked ambition is to help the plutocracy while millions of Americans face reduced health coverage and, as the federal budget deficit balloons, higher long-term tax bills.

Similarly, Britain's Tory government, which has espoused Brexit's populist aims, has recently announced another multi-billion-pound reduction in social security, education, and tax credits for the working poor. Those cuts are matched exactly by reductions in corporate and inheritance tax cuts.

Today, establishment opinion-makers, who scornfully rejected the pertinence of social class, have contributed to a political environment in which class politics was never more pertinent, toxic, and less discussed. Speaking on behalf of a ruling class comprising financial experts, bankers, corporate representatives, media owners, and big industry functionaries, they act exactly as if their goal were to deliver the working classes into the grubby hands of the populists and their empty promise of making America and Britain "great again."

The only prospect for civilizing society and detoxifying politics is a new political movement that harnesses on behalf of a new humanism the burning injustice that class war manufactures. Judging by its callous treatment of US Senator Bernie Sanders and Labour leader Jeremy Corbyn, the liberal establishment seems to fear such a movement more than it does Trump and Brexit.4


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Curbing Radical Nationalism the Finnish Way [feedly]

Curbing Radical Nationalism the Finnish Way
http://www.globalpolicyjournal.com/blog/12/12/2017/curbing-radical-nationalism-finnish-way

In the wake of the rise of nationalist sentiments in Western nations, Senni Salmi examines how Finland arrived at its inclusive narrative.

The term nationalism is not in fashion. Right-wing populism attached with ethnonationalism has gained ground in several European countries, which has made many liberals associate nationalism with racism. The big nationalist march held in Poland a few weeks ago raised concerns among Europeans due to the high number participants hailing from fascist and far-right backgrounds.

Rejecting this type of radical nationalism, which is exclusionary and tends to favor isolationist policies, should not lead to the conclusion that promoting nationalism is a bad thing. We need to look beyond the far right parties and recognize that nationalism is a valuable means for achieving social cohesion. In light of Finland's 100th anniversary on December 6th, this article seeks to explain why today's Finnish nationalism, which is based on a set of core values rather than ethno-cultural notions, is both inclusive and uniting in the face of internal and external threats.

Rethinking the concept

Fears of nationalism in its radical form are warranted, and those who are concerned should not let not let nationalism be defined by radicals. Then how can a country develop a shared sense of national consciousness that promotes equality and inclusion?

Sir Paul Collins has argued that a sense of shared national identity is important in order to foster and maintain the high levels of generosity and compromise that European countries are known for. However, this shared identity cannot be political or religious and therefore it needs to transcend political divisions and religious pluralism in favor of a broader and more inclusive community. Inclusive nationalism, seen as a political agenda, is currently not realized according to Collins because "the left lacks the will to nationalism; the right lacks the will to inclusion". His thoughts should be an eye-opener for center-right and center-left parties. Lawrence Summers has also put forward an idea about how to pursue a third way between dangerous ethnonationalism and abstract globalism, which he calls responsible nationalism. His suggestion is to put more emphasis on maximizing the welfare of the citizens, rather than pursuing the abstract global good. These proposals on how to rethink nationalism are important for those who shape political agendas, but the Finnish example urges citizens and voters around Europe to consider what kind of actions and values actually make their countries strong.

The important question to ask oneself is whether convictions and symbolism are more important than cooperation and freedom. Sometimes, strong ideals can cause political leaders to put their party before their country and stand in the way of cooperation. This applies not only to far-right parties but also idealists, who aim to make their internal political philosophy the goal of foreign policy.

With a broad, shared national consciousness, people will be predisposed to work together to defend the country's freedom and common ideals. This means that everyone's voice is heard and that the checks and balances are held in place, but also that idealist approaches sometimes need to be abandoned for the sake of national security. Opinions on energy, defense forces and international treaties will always vary, but in critical situations politicians should be able to set aside party divisions.

The Finnish example

Finland has had its share of far-right fringe movements as well as a populist party in government. However, the dominant form of nationalism in Finland has little to do with opportunistic groups that exploit nationalist rhetoric.

After 100 years as an independent nation, Finland appears remarkably stable as it heads into the future. This stability stems from the institutions and the citizens, who trust in their institutions as well as in each other. The Finnish institutions are inclusive, and give everyone a seat at the table.

Finland is committed to protect minority groups, and both the Swedish-speaking Finns and Sami have a special place in the constitution. The public authorities must provide for the cultural and societal needs of the Finnish and Swedish speakers on an equal basis, and the indigenous Sami have linguistic and cultural self-government.

Constitutional democracy is not only majority rule, but also protection of minorities. At the same time it is vital for cohesion and political unity that there is something that unites people beyond their cultural group affiliations, and that something is citizenship. At the end of the day you can be a Swedish-speaking Finn or Romani Finn, but you are first and foremost a Finn.

Inclusive institutions do not only function as a uniting platform for all citizens, but also play a crucial role in shaping shared values. Attachment to the values of equality and freedom, rather than ethnicity is characterizing for the shared identity. Public institutions that enjoy the respect and trust of citizens lead by example.

First and foremost, the Finnish education system fosters the individual potential of all students, while at the same time promoting equality. Students are not separated into different classrooms on the basis of their performance, and additional help is provided to those who need it. Education is given in both Finnish and Swedish, and although the languages of instruction differ, the curriculum is the same.

The endorsement of multiculturalism is part of the curriculum guidelines, and students are allowed to retain their foreign language, but for them too, a Finnish perspective and values are embraced.

The Finnish Defence Forces is another prime example, as most men are required to serve 6 to 12 months of military service, and women can also apply for voluntary military service. These types of institutions bring citizens of different backgrounds together and teach them solidarity, regardless of ethnicity and socioeconomic background.

To a great extent this unity could fit the description of constitutional patriotism, the idea that people are united by attachment to democratic and constitutional values, but it is questionable whether this type of attachment can be strong enough to generate the kind of solidarity and willingness to defend one's country that prevails among Finns. In the end, the role of emotions like empathy and trust toward fellow citizens – captured in so many beautiful Finnish proverbs – is equally important. The Finnish proverb "kaveria ei jätetä" – no friend is left behind (wounded or even dead brothers in arms are always brought home) – which originates from the Winter and Continuation wars, has a special place in the Finnish mindset. As in school, nobody is left behind in the military. To this day, the main reasons behind the great unity among conscripts are the guiding ideas of helping the weak, and working together.

A shared vision for security

National security is an issue that unites Finland across political affiliations. In a time of emerging threats such as information warfare, that increasingly target the individual, it is important for states to spread security awareness among all citizens.

Defense is viewed as a collective responsibility in Finland, and the willingness to defend the country is the highest (71%) in Finland among all European countries. Stories about the Finnish soldiers who fought back the Soviets have left a legacy of heroism that continues to inspire a high commitment to defend freedom. The collectivism is played up strongly in everything related to security. At the end of the day, being a Finnish citizen trumps other political identities, and this allows for cohesion in matters of national defense. The Finnish example suggests that a balance between individualism and collectivism is possible.

Finnish political institutions create conditions for inclusive and consensus-based political decision making, and offer a potential lesson for other countries as well. A long tradition of consensuality and coalition governments does facilitate this, but it is not a must – a shared view of national security and willingness to cooperate on fundamental questions is enough.

The last few years have shown that underestimating the importance of cohesive defense policy can lead to rash decisions. The return of geopolitics came unexpectedly for many European countries, forcing them to reevaluate their readiness, while Finland had remained determined to keep its territorial defense credible. Many neighboring countries had to realize that it is easy to lose defense capacity, but not to rebuild it. As a solution, NATO deployed additional troops in the Baltic States, and both Sweden and Lithuania recently reintroduced military conscription over security concerns. Defense policy needs to be continuous and stable, which is a feat more easily achieved with an underlying vision that everyone agrees on.

"Together"

Undoubtedly, a shared past and certain traditions have a role in shaping the Finnish national consciousness, and the Independence Day celebration is a good example of this. Many pay visits to war graves and light candles. Invoking the sacrifices of past generations do not in the case of Finland contribute to a national anger toward foreigners, but serve as a reminder of the gratitude for freedom. The courageous soldiers, but also citizens, politicians and diplomats are to thank for delicately performing a balancing act, and for fighting for what they believe in.

The Finnish independence centenary celebrations have mostly involved typical Finnish traditions, but there has been less debate about what actually constitutes Finnishness. More thought has been given to what Finland will look like in ten or even 100 years from now, and what Finland aspires to be like. The theme of this year has been "together", and the celebrations have shown that the way forward is by fostering an inclusive civil society. Celebrations have been inclusive in the sense that they have been very diverse, and naturally, open to the public.

To conclude, Finland would not be this strong and perseverant without an inclusive system of institutions, trust for one another and the widespread willingness to set aside disagreements in order to cooperate for the sake of a greater good. Thus, the Finnish example shows that nationalism need not be dismissed as a problem, but can in fact be put to more constructive ends than is currently the case in much of the Western world.

 

 

Senni Salmi is a visiting fellow at the Center for Transatlantic Relations. Co-written with Emanuel Örtengren, Visiting Fellow, and Oscar Karlsson, Finnish reservist and student. This post first appeared on the Center for Transatlantic Relations'  blog and is reprinted with permission. 


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Dean Baker: Mick Mulvaney and the Bad Actors Club [feedly]

Mick Mulvaney and the Bad Actors Club
http://cepr.net/publications/op-eds-columns/mick-mulvaney-and-the-bad-actors-club

Mick Mulvaney and the Bad Actors Club

Dean Baker
Truthout, December 11, 2017

See article on original site

Most people have probably heard about Mick Mulvaney's seizure of the Consumer Financial Protection Bureau (CFPB) as Donald Trump's appointed "acting director." They probably don't realize quite how outrageous this move is.

First, it is worth noting that Mulvaney openly holds the CFPB in contempt. When he was still in the House of Representatives, he referred to it as a "joke." Mulvaney has made it clear that he would be happier if the CFPB did not exist. Appointing him as acting director is a bit like selecting a hardcore atheist as the next pope.

It is also worth placing the CFPB in a larger economic context. The CFPB's general purpose is to protect people who are less financially sophisticated from predation by the financial industry. While it does perform this purpose, it also is working to make the financial industry more efficient, insofar as it succeeds in this effort.

Remember, the economic purpose of the financial industry is allocate credit to those who need it. In principle, we want to use as few resources as possible in this process. If we only need 1 million people rather than 2 million people to issue and service loans and perform other financial operations, then we have freed up a million people to work in health care, education or other productive sectors of the economy.

If financial corporations think they can make lots of money by writing deceptive contracts and abusive practices towards their customers, we know they will devote lots of resources to writing deceptive contracts and engaging in abusive practices. If the CFPB can shut down this avenue for making profits, then the people working in the financial sector will actually be focused on providing customers a service, rather than ripping them off. This is a gain to the economy as a whole.

Trump's decision to appoint Mulvaney was obviously intended to neuter the CFPB and reopen the door to all sorts of predatory practices. In carrying through this appointment, Trump was not only circumventing the order of succession laid out in the law creating the CFPB, he was also undermining the explicit intention of Congress for the CFPB to be an independent bureau.

No one disputes that President Trump has the right to appoint the replacement for outgoing director Richard Cordray. However the law is written so that he would have to nominate someone who would go through the Senate approval process. This means that Trump's candidate would have to make various disclosures and undergo questioning by members of the Senate.

Furthermore, once the nominee was approved by the Senate, he or she could only be removed for cause. Trump would not have the authority to remove his pick to the head the Bureau simply because he disapproved of their decisions in this capacity.

By contrast, Mulvaney has made no disclosures and was not subject to any questions from the Senate. He also has no independence from President Trump. He can be removed any day of the week for any reason. In fact, since Mulvaney's day job is running the Office of Management and Budget, where he also serves at the will of the president, he risks being fired from two jobs if he does anything that gets Donald Trump angry.

The use of an acting director, in this case, is not an accident. Cordray's plans to leave the CFPB before his term ends next summer were widely reported in the media. There is no reason that Trump could not have had a successor already selected whose name could be given to the Senate as soon as Cordray formally announced his resignation. Trump chose to go the Mulvaney acting director route precisely to circumvent this process.

Unfortunately, this is not the only case where Trump has appointed "acting" officials to head nominally independent agencies, thereby avoiding the constitutional requirement for the Senate to give its "advice and consent." Keith Norieka, a person who had a career in the financial industry, with no regulatory experience, served as acting comptroller of the currency for six months, just recently being replaced by Trump's nominee for this position.

Perhaps even more disconcerting is Trump's selection of David Kautter as acting director of the Internal Revenue Service (IRS) when the term of the previous director ended November 13. Here also, there is no excuse for not having a nominee to submit to the Senate. The expiration of the IRS director's term is set in law, so Trump's team knew about this opening the day he was elected.

As is the case with Norieka, Kautter has no experience in enforcement. His background was in running tax avoidance scams at one of the country's largest accounting firms. And, this acting director of an ostensibly independent agency, like the other acting agency heads, can be fired by Trump any day of the week for any reason.

Congress could put a stop to this abuse of the authority to appoint "acting" heads of agencies and departments. There is not much ambiguity about the words "advice and consent," and there is neither with these and other acting appointees. But the Republicans in Congress don't really care much about the Constitution because right now, rich people need tax cuts.


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Bernstein: Catching up on links [feedly]

Catching up on links
http://jaredbernsteinblog.com/catching-up-on-links/

A number of pieces you might want to check out:

–I use the Illinois gubernatorial election, dominated by candidates with $ to burn, to raise concerns about money in politics: are these elections or auctions?

–The Trump admin is stealthily taking down the guardrails intended to regulate against the shampoo economy: bubble, bust, repeat. Over at the NYT.

–Riffing off of last weeks employment report, which showed solid job growth but weak wage growth, I use a simple model to show nominal wage growth should be faster given our low unemployment rate.

Source: BLS, my analysis

In my brevity re the above post, I left out a key factor right now that's partially holding back nominal wage growth: slow productivity growth. That shaves about half-a-percent off the forecast, but it doesn't fully explain the gap. On the other hand, in a more detailed model, Fed Chair Yellen finds slow productivity growth largely offsets diminished slack.

Measurement aside, the point is that slow productivity growth is a clear drag on wage growth. In that regard, if the recent acceleration in productivity growth should hold–it's way too soon to tell–that should bump up wage growth. However, as I've argued forever, in our age of inequality, what helps at the average doesn't fully pass through to the median.


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Recovery Radio:Podcast: Recovery Radio - Dec 12, 2017 -- The Pontifex Unit

John Case has sent you a link to a blog:



Blog: Recovery Radio
Post: Podcast: Recovery Radio - Dec 12, 2017 -- The Pontifex Unit
Link: http://recovery.enlightenradio.org/2017/12/podcast-recovery-radio-dec-12-2017.html

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Monday, December 11, 2017

Paul Krugman: Trump and Ryan Versus the Little People



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Paul Krugman: Trump and Ryan Versus the Little People // Economist's View
http://economistsview.typepad.com/economistsview/2017/11/paul-krugman-trump-and-ryan-versus-the-little-people.html

"The end result of this tax bill would be to leave most working Americans, even those who wouldn't face direct tax increases, worse off, all for the benefit of a tiny minority":

Trump and Ryan Versus the Little People, by Paul Krugman, NY Times: According to news reports, Donald Trump wanted the House Republican tax "reform" bill to be called the Cut Cut Cut Act. Alas, he didn't get his wish, and it was instead given a boring name nobody can remember. But there's still time to change it! So let me propose, as one reader suggested, that it be renamed the Leona Helmsley Act, after the New York hotelier convicted of tax evasion, who famously declared that "only the little people pay taxes."

That, after all, is the main thrust of the bill. It hugely favors the wealthy over the middle class, which is pretty much always true of Republican proposals. But it's not just about favoring high incomes: It also systematically favors people who live off their assets, especially inherited wealth, over the little people — that is, poor shlubs who actually have to work for a living. ...

So when Gary Cohn, Trump's top economic adviser, says that the bill's goal is "to deliver middle-class tax cuts to the hard-working families in this country," he's claiming that up is down and black is white. This bill does little or nothing for the middle class, and even among the affluent it's biased against those who work hard in favor of the idle rich.

Also let's not forget that tax increases on working Americans are only part of the story. This bill would also, according to the Congressional Budget Office, add $1.7 trillion to the national debt over the next decade. You know what that means: If this bill or anything like it passes, Republicans will immediately revert to their previous pretense of being deficit hawks and start demanding spending cuts.

And since federal spending is dominated by programs — Social Security, Medicare and Medicaid — that benefit the middle and working classes, the end result of this tax bill would be to leave most working Americans, even those who wouldn't face direct tax increases, worse off, all for the benefit of a tiny minority, especially those who haven't even worked for their wealth.

You might wonder how Republicans imagine that they can get away with this. But anyone who has paid attention to U.S. politics knows the answer. First, they will lie, unashamedly, about what their bill actually does. Second, they will try to distract working-class voters by stoking racial animosity. That didn't work too well in Tuesday's elections, but they'll keep on trying.


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