About 99 percent of us have that sinking feeling

You know me and my wonky graphs.  You also know I blog a lot about rising income inequality and that I think it’s a huge problem.  So, this MOJO Power graph and the article it came with piqued my curiosity.  It’s from an article by Kevin Drum writing on a Timothy B Lee blogpost on the preemption of ‘genuine left wing voices’ by libertarians.   I’m not sure how libertarians could be confused for moderates, liberals or lefties but given that establishment conservatives have an orthodoxy so tight that few fit, I suppose everything else gets to wear the liberal label. But, maybe there’s more to it than that.

We talked about this a little on a thread yesterday.  Both Ariana Huffington and Kos used to be Republicans.  They left the party when the religious right took over and because, frankly, I don’t think they like the fact that so many blue collar Reagan Democrats had just up and joined their old country club.  There’s also the odd phenomenon of tea party populists that don’t seem to know where they are or where they belong either.  We’ve seen how a  lot of these folks have made their way into policy circles through their support or their horror of the current administration so I think it’s worth viewing three blog writers on that topic.  Why are so many people confused about their political identity any more?

Libertarian ‘insight’ used to the butt of jokes at academic cocktail parties where you discussed Utopian moonbattery and even worse fiction.  Now there seems to be an industry around producing what they call journals, institutions, and philosophy that is some how running loose in mainstream conversations demanding to be taken seriously.    It’s hard to do that because they don’t associate with data and they seem to thrive on passing memes that have no basis in reality.  (The ones on the FED just kill me.) They’re in the tea party, they’re all for Rand and Ron Paul, and yet, some of them have made their way to the liberal blogosphere.  What’s going on? Plus, what’s the deal with all these solid working class–in some cases UNION folks–heading to tea party rallies?  Haven’t they ever heard of Dick Armey?

Drum shows how the worst of the libertarian assumptions they hold up as facts just don’t hold up to the light of day.  He starts with a shared assumption from the right wing and libertarians as described by Will Wilkinson. This meme is the mild form libertarianism from the Hayek-Friedman sect.

It’s best to just maximize growth rates, pre-tax distribution be damned, and then fund wicked-good social insurance with huge revenues from an optimal tax scheme.

We’ve got scads of data that show this meme to be a completely false assumption.  We’d have a better economy right now if that were true.  In fact, the only time we had a decent economy in recent history was when that particular assumption was rolled back during the Clinton years.   But, don’t take it from me, read what Kevin Drum has to say.  Those assumptions are very wrong.

First, it contains an implicit conviction that libertarian notions of tax and regulatory structures will maximize growth rates. This is practically an article of faith on the right, but there’s virtually no empirical evidence to support it. As it happens, I’d argue that my preferred brand of the modern mixed economy is, on the whole, probably more efficient than a stripped down libertarian state, even one that includes lots of centrally-directed income redistribution. But not by much. Personally, I’d be pretty happy if both sides accepted the notion that within a fairly wide range of modern capitalist systems — from Sweden to the U.S., say — overall growth rates change very little. For the most part, we’re really arguing about other things.

Second, I suspect there’s no feasible path to Will’s state of the world. The problem is that a system that generates enormous income inequality also generates enormous power inequality — and if corporations and the rich are allowed to amass huge amounts of economic power, they’ll always use that power to keep their own tax rates low. It’s nearly impossible to create a high-tax/high-service state if your starting point is a near oligarchy where the rich control the levers of political power.

Third, look at the graph. We’ve had this trickle up to the one percent form of economic nonsense since the Reagan years and all it’s done is made things radically worse.   It’s led to this situation where the supply side of the curve completely craps all over the demand side of the curve in product markets.  The outright hostility to unions and the abuse and disempowerment of human beings–not human “capital”–have completely shifted  income levels and underlying market power to some place where you truly think you’d see some kind of general revolt, strike, or overthrow.

It should be patently obvious now that Wall Street has recovered, bonuses have recovered, and corporate profits have recovered while  any one not up at the top of that racket can hardly survive these days.  The unemployment rate, the numbers of foreclosures, and the numbers of bankruptcies are tips of the icebergs.  We’re not going to see growth rates of GDP that will clear that up too.  More frightening is that the powers that be don’t seem to even fake caring.

When you point all these things out to libertarians, they’ll shift the ground on you and say point me where it says in the constitution and mutter something about Wilson and the imperial presidency.  This is the place where they firmly intersect the right wing. Look, Wilson is dead.  The Bush legacy lives and the Obama legacy is still being written.  Still, some of them have crept over and become neoliberals and identified with the left.  Why?

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