Tag Archives: monetary policy

The Way We Weren’t: My Response to Yglesias’ Response to My Response to His Response to My Response

16 Jul

Misty Water Colored Memories of New Deal Social Solidarity and Public InvestmentPrompted by this post from Mike Konczal, Matt Yglesias has weighed in again on our debate about what the government should do to create jobs. But it turns out that’s not what we’re debating.  What we’re really debating, says Yglesias, is monetary policy: specifically, whether the left should care about it.

Yglesias thinks we should, and I gather I’m supposed to think we shouldn’t. Instead of confronting the real impact monetary policy has on jobs, inequality, and so on, I, like my brothers and sisters on the left, have allowed my “romance with the idea of the Works Progress Administration,” the misty water-colored memory of New Deal “social solidarity” and “public investment,” to blur my thinking about what would actually improve the material prospects of middle- and working-class people. That’s a shame, says Yglesias (and Konczal says the same thing), because historically monetary policy was the subject of heated debate, a debate the left has now ceded to the right because of its romance with the way we were.

To be fair: Yglesias isn’t explicitly talking about me here, at least I don’t think he is, but he’s talking about people I gather he thinks are like me—and perhaps a sensibility he detects in my posts.

I have some thoughts about these larger ideological questions.  But before I share them, it’s important to remember how we got here. This exchange was prompted by a debate about what government should do to create jobs, specifically, Yglesias’ response to the question “What is the single best thing Washington can do to jumpstart job creation?”

Yglesias proposed that the Fed increase its inflation targets. I offered several concrete, practical reasons why I didn’t think that was the single best thing government could do, and proposed instead that the government should just create jobs. Given the obvious benefits of a jobs program, and the fact that Yglesias’ proposal seemed to have so little to recommend it as a jobs program (it might have other benefits, as Yglesias and Konczal have argued, but I still don’t see the jobs), I was moved to speculate on the ideological dimensions—”the Reaganite temper”—of Yglesias’ thinking on these matters.

This back story is important for two reasons. First, in his three responses to my original post, Yglesias hasn’t addressed the concrete objections I’ve raised to his proposal. The closest he has come (and Konczal makes a similar argument) is to say that any jobs programs could be easily counteracted by tight-fisted policies of the Fed. That’s true and would be worrisome if it occurred (though Bernanke seems to want some kind of stimulus from the government, so I’m not sure it would actually happen in this case). But it doesn’t really support the claim that increasing inflation now is the best—or even a—thing government could do to create jobs. Nor does it counter the objections I raised to that proposal.

Second, Yglesias seems to believe my objections to his proposal are primarily ideological. As he puts it:

I’d been asked to write something for The Atlantic, so I wrote something couched in technocratic language, and Robin was really objecting to me on thematic/ideological grounds.

But as I said, I was more struck by the disparity between the concrete flaws in his proposal and the obvious benefits of a jobs program—benefits, I should add, neither Yglesias nor Konczal have disputed; in fact, they both support jobs programs—and that’s what led me to raise the larger ideological/thematic questions about his proposal. My objections, in other words, were not primarily ideological or thematic, though they did lead me to raise ideological/thematic questions.

In a different situation, I could see the benefits of increasing inflation targets. Based on my discussions with Doug Henwood, who’s really done the heavy lifting here and should be brought more forcefully into this discussion, we don’t seem to be in that situation. Yglesias’ insistence on approaching the problem of jobs through the Fed’s inflation’s targets seems more of a symptom of his ideology, whatever it is, than my focus on a jobs program is of mine.

But since the question of ideology has been raised, let’s go there.  I really appreciate what Konczal and Yglesias have to say about monetary policy and why the the left should care about it. And I can see why my initial characterization of Yglesias’ position as Reaganite may have been too hasty.

For Yglesias and even more so for Konczal, monetary policy—and raising inflation targets—can be a form of dispossession, a way of countering the power of wealth and restoring power to the debtor, the single mom maxed out on her credit card, the mortgage-strapped homeowner; a way of forcing the rich to do something productive (like hire people) with their wealth; and a way of supporting strong fiscal policies that put people to work.

Some of that is fine, as far as it goes—Doug has some genuine concerns about this reliance on inflation as a mode of equalizing our fates and fortunes that seem quite real to me—and I don’t really know of anyone on the left (I’ve been asking around over the last few days) who would disagree that good monetary policy can be a critical supplement to good fiscal policy.  Nor do I know of anyone on the left who thinks that monetary policy is “technical,” to respond to Yglesias’ charge, which I found a little bizarre; I mean, say what you will about the left, it’s not exactly known for thinking anything in the economy is merely technical or apolitical.

But here’s where we do have an ideological disagreement. The reason why leftists like myself emphasize fiscal policy over monetary policy is that we ultimately approach the problem of inequality as not merely a question of money (who has it and who doesn’t) but as a problem of power, of relationships between individuals and classes.

We’d like to see people who work for other people make more money on the job, have more options for employment (including government work), more unions and collective bargaining, and more taxation and regulation of the wealthy — not just so that the poor or the working and middle classes can enjoy the good things in life (though that’s critical) but also so that they can have more power on the job, against the men and women who have the greatest day-to-day say in their lives.

I totally see what Konczal is saying about enhancing the power of debtors, and that’s critical for individual and family finances, but here’s what a credit card company or a bank holding your mortgage can’t do to you: it can’t tell you to be at work at 8 am; it can’t tell you have to stay after work when you have to get home to your kids; it can’t tell you when to pee in a cup (for a drug test) or when you can’t pee (because there’s no bathroom break allowed); it can’t tell you can’t sport a political bumper sticker on your car; it can’t tell you to stand up or sit down, to speak out or shut up; it can’t run your day-to-day, minute-to-minute life the way an employer can.

I realize this may seem far afield from the concerns of Yglesias, though I suspect much less so to Konczal.  But if you want a single reason why leftists prefer to enhance the material prospects of the vast majority through fiscal as opposed to monetary policy it is that we see money as a form—and subset—of power: not just the power to actualize your dreams or to achieve some kind of abstract parity with some faraway class of wealthy people, but the power to oppose and resist and challenge those who have the greatest power over your day-to-day lives.

So, here’s what a government jobs program would mean to us: less unemployment, absolutely; greater stimulus and multiplier effects, absolutely; but, beyond those specific economic indices, it would also mean greater chances of unionization; better options (often) for pay and benefits; greater options for exit from bad private-sector work and thus, in the long run, better options for voice and power at that work.

Government jobs are obviously not a panacea, especially not on their own, but when they’re part of a larger package of increased labor rights, tighter regulation, higher minimum wage, greater taxation, more generous unemployment and social welfare policies, they add up to a vision in which the masters of the universe have to contend with more—and different—men and women than they heretofore have had to contend with.

You can certainly disagree with or dislike that vision, but that is the vision.  Not a romantic dream of public investment or a false memory of social solidarity, but a hard-headed, gritty—dare I say realistic?—understanding of how power works on and off the job, and a desire, which may or may not be realistic, to change that.

When Yglesias says that the left lacks a political analysis of money and the money supply, he’s thinking of an analysis that would distinguish Republican from Democrat.  At the dawn of the republic, he points out, Hamiltonians and Jefersonians divided over monetary policy, and so on down to Populists and FDR.  Today, he says, it is only the Republicans who have a distinctively political analysis of money, i.e., an analysis of money that marks them as Republican or conservative.

Yglesias might be right about the Republicans, but I would urge him to develop a genuinely political analysis of money: not one that marks him as a Democrat or liberal or whatever he wants to call himself, but one that addresses politics in the deepest sense of power as it lived and experienced in the day to day lives of men and women.

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