I am getting into a rather wonkish part of Gar Alperovitz's book,
Beyond Capitalism, that I have been reviewing in my diaries on
An Opportunity Society. In my last diary I covered how large corporations are incompatible with Democracy and one free market response to increasing inequality of wealth - ESOPs. In this one I am including an overview and critique of New Deal liberalism from this month's Atlantic Monthly,
The "L" Word, followed by some locally oriented strategies to solve the increasingly serious problem of the inequality of wealth in America.
American liberals have made scarcely a new proposal for reform in twenty years," John Kenneth Galbraith wrote in 1952. Liberals were living off the patrimony of the New Deal. They still are.
Saving Social Security is the priority of the hour for liberal interest groups, progressive bloggers, and congressional Democrats. If half the energy and intelligence the Democrats spent fighting President Bush's privatization plan went into developing new proposals for reform, they might once more be seen as the party of hope. As it is, divided on taxes, war, and social issues, they achieve unity of purpose only in defending a program enacted in 1935. They may stymie Bush-but at the cost of defining themselves as the party of memory.
What's the big deal about the New Deal anyway? Are liberals supposed to return to the "old ideas" of the 30's & 40's?
For the New Dealers "reform" meant reforming capitalism; it meant state intervention in the economy to increase the economic security and individual freedom of ordinary Americans. That idea, a synthesis of populism and progressivism, was called liberalism. Liberals have been in retreat from liberalism for at least a generation. They defend Social Security, but not the principle of intervention behind the New Deal.
What's the problem?
George Lakoff, Bill Moyers, and other commentators have attributed the Democrats' troubles to a lack of funding for liberal think tanks to match that of the conservative Heritage Foundation, American Enterprise Institute, and the like. But think tanks won't help a party afraid to state its central idea. Think tanks proliferate policies. Democrats already have a policy for every problem. What they lack is a governing philosophy. That's why so many Americans don't know what the party stands for.
In addition to getting out maneuvered by think tanks, Democrats have abandoned the market place of ideas for wonkish disputes with Republicans over fiscal responsibility.
But the conservatives in power have demonstrated that the liberal-conservative distinction is not between intervention and laissez-faire. It's between intervening to achieve public benefits that could not be realized through the private market versus intervening to reward special interests. The Republican Party of George W. Bush has lavished billions in subsidies on profitable industries; John McCain refers to the Administration's energy bill as "No lobbyist left behind." Corporations pump millions in campaign contributions into one end of The GOP, and not a few Democratic lawmakers extract billions from the other-in subsidies, tax breaks, and regulatory relief.
In decrying the resulting budget deficits, the Democrats legitimate the core, "fiscal responsibility" idea of conservatism which is honored only in the breach by conservatives themselves. Having a real conservative party, one that believed in fiscal prudence as the guarantor of laissez-faire, would be nice; antiquity has its charms. But the Democrats should not be that party. What they say about deficits today could come back to haunt them tomorrow, when they will have to borrow to implement policies that-unlike Bush's tax cuts-at least benefit the future generations paying for them.
Are there viable market based solutions to our political and economic problems?
Market-based solutions to the problems of our age are not plausible. Take globalization, health care, and-the problem that perhaps looms larger than all others-the environment. Globalization and technology are a scissors cutting away at an American job base formed in the post-war era of self-sufficiency and technological stability.
Perhaps innovation will hasten the development of new forms of mass employment-but in countries with cheaper labor. Meanwhile, the twenty-five to thirty-year olds living at home with their parents because they can't afford to live on their own-a growing demographic in the U.S.-may portend a future of structural unemployment and underemployment. If the private market cannot create jobs, then government must. Just as the New Deal put the unemployed to work building post offices, dams, and wilderness trails that are still in use today, so twenty-first-century government will either provide jobs or face social unrest.
Has any Democrat mentioned the Apollo Energy Self Reliance Project lately? If there are no viable free market solutions to our economic problems, what's a liberal to do?
As in the 1930s, the "system" must be reformed to be saved. The state's role in economic life will expand. The longer we wait to make the necessary changes, the more drastic and thoroughgoing the state's role will be. My fear is that nothing will change until an environmental 9/11 occurs. At that point, to deal with the "emergency," Americans will accede to martial law and eventually-as drought, crop failure, the flooding of coastal cities continue-to dictatorship. Clearly more than preserving the polar ice cap is at stake in stopping climate change. Earth may not hang in the balance, but American democracy might. We must plan now to avoid panic later.
How on earth did President George "Mr. Crisis" Bush miss this problem? If we are going to start planning now, here are a few viable local initiatives that liberals can use as a blue print for transforming the political landscape as well as our economy.
That's my cue to return to Beyond Capitalism:
[M]ore stable, locally oriented economic development is increasingly favored by sectoral changes even in an era of increasingly globalization . . ."About 60 percent of U.S. economic activity is local and provides residents with the goods and services that make their lives comfortable," observes economist Thomas Michael Powser. "This includes retail eactivities; personal, repair, medical, educational, and professional services; construction; public utilities; local transportation; financial institutions; real estate; and government services. Thus almost all local economies are dominated by residents taking in each other's wash."
What's up? Alperovitz points out that locally oriented economic activity has increased from 42 percent in 1940 to 52 percent in 1980, to 60 percent in 1992. What happened to globalization?
Paul Krugman offers a summary judgment: "Although we talk a lot these days about globalization, about a world grown small, when you look at the economies of modern cities what you see is a process of localization: A steadily rising share of the work force produces services that are sold only within the same metropolitan area."
Community-oriented strategies throughout the nation now regularly build upon these realities to achieve greater stability. Some stress bottom-up development utilizing conventional tax, loan, procurement, and other strategies. Others emphasize measures that enhance the local community's physical and social environment so as to attract professionals and others looking for a supportive community in which to live and raise children. Successfully attracting new arrivals, in turn, stimulates new services, construction, and other economic activity. Attracting retirees and their pension income flows can also help bolster community stabilization efforts - a factor of increasing importance as the baby-boom generation reaches retirement age.
Does the phrase Think global, act local ring a bell? That's what we're talking about, pure and simple. Local initiatives are being encouraged at the federal level by Republicans and Democrats.
At the national level, both political parties have also shown themselves responsive to the practical and philosophical elements of a community-building paradigm - and to the concerns of local constituents. Among the many federal policies and precedents that now exist (and that suggest possible directions for future development) are:
* The strategic targeting, currently, of public contracts by federal agencies to small businesses in "HUBZones" (Historically Underutilized Business Zones) - that is, areas that have a high proportion of low-income households or those experiencing high unemployment.
* Trade Adjustment Assistance to communities experiencing dislocation as a result of imports. Workers receiving TAA are eligible for an additional fifty-two weeks of income assistance (beyond the standard twenty-six weeks of unemployment insurance) and for a variety of training and other programs.
* The Commmunity Adjustment and Investment Program, which uses funding from the North American Development Bank to make loans and grants to specific economically depressed communities.
* Community Development Block Grants, which in fiscal year 2004 will provide $4.4 billion in support to various locally selected, largely community-based efforts.
* The Empowerment Zone/Enterprise community programs, which, as of this writing, are expected to involve over $1 billion in public subsidies in 2004.
* The previously cited New Markets Initiative, passed as part of the Community Renewal Tax Relief Act of 2000, which will make several billion dollars of federal tax credits available in the next six years. The credit (30 percent of funds invested) is available to specially certified entities that make investments in low-income communities.
There are profound and serious economic initiatives being generated at the local level.
The growing force and political appeal of locally oriented strategies is also evident in organizing efforts by engaged citizens. Although many studies show a decline in national citizen participation, the United States in fact is in the midst of an extraordinary resurgence of local community-building efforts.
The long-standing largely black
BUILD alliance in Baltimore, for instance, challenges local insurance and home mortgage redlining, builds and rehabilitates homes, raises money for student scholarships and -importantly - registers thousands of voters.
Since 1976
Citizens for Community Iimprovement in Iowa has spearheaded opposition to corporate concentration in state agriculture, helped create financing for small farms and low-incomme rural and urban housing, and fought for enforcement of environmental air and water regulations.
In San Antonio,
COPS - Communities Organized for Public Service -- combines research and planning with public income groups. In the last several decades COPS campaigns have produced funds for libraries, playgrounds, schools, street paving, sewers, flood protection, and other infrastructure improvements. . . . Taken together, COPS's organizing efforts have secured an estimated $1 billion for neighborhood development from these and other sources.
In Oakland, California, the
Labor Immigrant Organizers Network (LION) helped the hotel employees' union, HERE Local 2850, successfully challenge corporate efforts to prevent union organizing. In turn, the union supported LION's efforts to organize local residents around immigration issues.
These are just some of the local initiatives in addition to the
living wage campaign that has succeeded all across the country. The failure of Walmart to penetrate the California market is proof of the power of neighborhood groups. It "is commonly all but impossible for developers to win approval of projects that are strongly opposed by a neighborhood association".
Neighborhood-based government draws easily on people's sense of identity with the area they live in. . . . None of this is to say that a new day of participatory democracy has arrived. In most cities power still largely resides in the hands of traditional economic interests. . . .
An inability to achieve solutions to growing problems through traditional means has repeatedly driven home a painful reality. In case after case, the choice presented has been between no solution, and the ultimately critical decision to begin the arduous long-term process of rebuilding, step by step - at home, within reach, from the bottom up.
To be successful, liberals have to look past building new political power blocs.
What is needed is a new vision of community, a higher vision of the good of a whole community that transcends polarization of groups. Groups have been effective in the past in achieving equality. Now we're in a position where the only way progress can continue is through a new definition of community.
Next Diary: Community, the Environment, and the "Nonsexist" City
Alperovitz gets radical.
