Private Sector Fantasies

This note is about a subject with perhaps more deliberately-sown confusion than any other:  the role of government in a market economy.

We start with the saint of free markets Adam Smith.   Adam Smith had no delusions that the free market system would somehow manage itself.   He saw three roles for government in a market economy:  defense, justice, and education.  Further he understood that the private sector and the free market were not the same thing—one of the roles of justice was to prevent the private sector from creating monopolies and thus perverting the free market.  In other words even as an ideal, the free market was neither self -policing (it needed to be protected against its own tendency to create abuses) nor self-sustaining (it needed government to create the population of educated workers).

With that as introduction, we want to talk more about the relations of business and government.  There are three sections.  The first two expand on policing and sustaining of the free market, as just discussed.  The third talks about scope—what objectives for society are in or out of scope for the free market. The Trump administration has positioned itself as the defender of free markets against government.  Instead they are defenders of something rather different, with real dangers as a result.

 

Policing the free market

Monopolies are bad.  they raise prices and stifle progress.  They are also by many measures growing in power.  But they are not the only area where the free market needs to be protected from itself.   For example, lack of business transparency perverts the capital markets, so the SEC plays a crucial role.

A more complicated but equally crucial role is regulation of the boom and bust cycles (with bank failures and human misery) that used to be endemic to capitalism.  Government has two responsibilities for controlling those cycles:

  1. It needs to act “countercyclically”. Despite the jargon term, this is so basic as to be biblical—save in good times to prepare for bad. In a recession the government is the only party able to stop the spiral of low sales -> layoffs -> even lower sales-> even more layoffs.  It does that by injecting money into the economy to stabilize sales.  But in a recession, tax revenues are down, and the money has to come from somewhere–preferably savings but if necessary debt.  In 2008 George W. Bush had just fought an off-budget 2 trillion-dollar war, so the cupboard was bare.  Republicans screamed about increasing the deficit, even proposing constitutional amendments for balanced budgets.  Their line “real people tighten their belts when they have to” was a deliberate misrepresentation.  Real people save for bad times; otherwise they have to borrow to put food on the table.
  2. Government needs to recognize and control the excesses that can creep in to cause havoc in the business cycle. While many factors contributed to the 2008 crash, the most spectacularly deadly was the perversion of the banking system caused by mortgage-backed securities. In the giddiness of deregulation no one was looking.  The aftermath produced the Dodd-Frank legislation as an antidote.

Finally, as a last example, there are categories of risk where you can’t count on the business decision-making process to do the job.  Low-probability/high costs events (plane crashes, oil rig blow-outs) should in theory be prevented by rational decision-making, but in practice it’s hard to refrain from increasing profits by ignoring something that “really isn’t going to happen”.  So there is a role for government there too—protecting both the public and the businesses.

Current status:

– The administration’s anti-trust position remains to be seen.  Trump campaigned against mergers, but appointed an industry-representing trust lawyer to head the anti-trust division.

– There seems to be no recognition of business cycle issues.  Trump’s tax plan runs a big deficit to stimulate an economy close to full employment.  This runs the risk of repeating 2008 with an even worse debt position to fight it.  He also wants to repeal Dodd-Frank and says he won’t enforce it now.

– The general rule is that any regulation opposed by any business is bad.

=>  There is no serious recognition that the financial system needs policing.  Trump runs the show based on what he has wanted to see for his own businesses.  This is a blind dash into another 2008 or worse.

 

Sustaining the free market

Adam Smith pointed out the need for government to supply a suitably-trained workforce.   In the eighteenth century that meant simply literacy.   The definition of suitably-trained has changed over time.  By 1940 a then astounding 50% of American students finished high school.  In that era no other country approached that level of broad education support.   Then the GI bill made college possible for veterans, and public colleges expanded widely throughout the 1960’s and 70’s.  This coincided with unquestioned American economic dominance.  An educated workforce (at all levels) remains a critical national requirement.

You can take that one step farther.  Equality of opportunity is usually discussed in terms of social effects, but there is a corresponding benefit to the free market.   Business and the market benefit when all persons are able to achieve up to their capabilities.  The United States used to lead the world in upward mobility, but with rising inequality it now ranks behind most developed countries.

There is one more government role that fits here as well, namely research.  Government support of research produces people to be hired by cutting-edge businesses, and also supports the creation of new businesses to exploit the progress of science and technology.

Current status:

– For college, the student debt crisis speaks for itself.  A whole generation of students can’t imagine when they will be able to get out of debt.  This is compounded by De Vos’ support of shady lenders and weakening of controls on fraudulent educational institutions.

– For K- 12 education, states have retreated in funding, and De Vos is proposing a voucher system that will abandon the broader population.  Vouchers will be fixed in dollar value, to be augmented by surcharges at the now-privatized schools.   If you want a good education you pay for it; if you can’t, there is no guarantee of what you get.  This is institutionalized separate and unequal.

– Trump’s budget essentially abandons the government’s role in research, and his appointees have attempted to minimize the role of science.

=> There is surprisingly little recognition that government has an important role here at all–except to privatize it!

 

Scope of the free market

Adam Smith felt that the private sector could not be trusted even to defend free markets.  So it is not surprising that there are other aspects of society that need defending as well.

We give a few examples:

– Well-being of workers.   Smith describes effects of supply and demand on workers, and he even points out that adequately-paid workers may be more productive, but he makes no claim of utopia from the free market.   In fact in Smith’s description, workers’ welfare depends on a market for labor in which individuals have little bargaining power.

– Resources and the environment

Enterprises will use the environment for their own benefit, unless there are rules to the contrary.

– Infrastructure

Public resources such as roads, bridge, airports, internet, etc. should be built and maintained as needed by everyone.

Current status:

– Trump has pushed to limit OSHA workrules, opposes unions, and has no plans to raise the minimum wage.

– The EPA is being severely cut and redirected to helping businesses.

– The stated approach to infrastructure is via private investment, which will go where the money is.

=> There is no recognition that areas such as these can be out of scope for the private sector.  Instead there is a blind belief that growth solves everything.

 

From this summary it should be clear how far we are from free market economics.

The current national policy is that the private sector just needs to be encouraged to go do its thing.   We don’t have to care about policing its risk, we can let it take care of education and research, and nothing other than its success is needed to solve every other problem in society.  Just make sure it’s flush with cash and let it go.

That was the history of the nineteenth century, and for vast part of the population it was no picnic.  And it is worth remembering that 1929 really did happen.

Even thinking of the more recent past there’s an eerie familiarity about our situation.  We have a supremely confident lunatic fringe with the power to run amok.  The last lunatic fringe to take control of our government (remember the neocons?) gave us the Iraq war—which destabilized the Middle East and bankrupted the country—and the crash of 2008.

This time it could well be worse.

Minding the Store

It has been a long time since there was someone interested in governing the United States of America.  For now we are specializing in promotional stunts (essentially all of foreign policy) or deliveries to electoral constituencies (climate change, ACA repeal, white supremacist racism).

Now that we can have no delusions about what Trump represents (pardoning Arpaio was a last straw), the country is in dire need of a way to get through the next 3 ½ years.

So it is worth remembering that there is actually a group in government trying to do something positive for the country.  That is the bipartisan group of senators working to fix problems with Obamacare (e.g. number of plans offered).  Not only is that a laudable activity for itself (whether or not the results get quashed), but it makes you think about other things a bipartisan group could do.   Here is one short list.

– Supreme Court nominees

At this point you don’t have to be a Democrat to recognize that democracy in this country is under threat.  We need to decide that a next Supreme Court justice cannot use the war powers clause or anything else to promote legal tyranny.  That applies to the role of Congress, to delaying or otherwise manipulating elections, and to Presidential pardons.

– Jobs program subsidies

During the election both candidates spoke about a government role in promoting employment in under-served areas (Appalachia, inner cities, etc.).  More recently, Republicans have promoted a deal with Foxcomm that was very heavily subsidized by the state of Wisconsin.

This needs to be a federal program because not all states can do it themselves, because it needs to be planned at a national level, and because a federal program could reduce the leverage employers have in playing off states against each other.

– Infrastructure

This is another area promoted by both candidates in the election.  There are of course significant differences in approach.  But it seems that issues such as selection of projects, rules and roles for private investment, and protection against corruption can be solved if there is a will to do it.

– Taxes

This a controversial area, and Trump’s so-called tax reform is not helpful.   But there is agreement on at least a couple of points:

  1. Real tax reform means eliminating the current maze of special gifts to create a more equitable system and a correspondingly lower basic tax rate. That kind of reform was achieved as a bipartisan effort under Reagan.   It has little to do with proposals currently on the table, but that doesn’t mean it can’t be done.
  2. As part of that effort, there is agreement that the basic corporate tax rate is too high. So that seems a good place to start–when accompanied by item #1.

– Education

Education is one of the most important services provided by government.  Even if De Vos vouchers turn out to be off-limits, there are at least two areas where bipartisan work is possible:

  1. The student loan crisis is a huge burden on a whole generation. This is not because students have suddenly become wasteful in their habits, but because costs of college have risen rapidly even in state institutions.  Government needs to help out.
  2. Government needs to help students and states to navigate the costs and benefits of educational programs. This is not just a matter of fraudulent institutions and sweetheart deals to vendors (although there is plenty of that).   Students need the information to choose for their futures.  And we as a country need to decide what equality of opportunity means for the cost of college.

– Foreign Policy

The only foreign policy we currently have is a disdain for employees of the State Department and a desire to exploit foreign issues for chest-beating electoral gestures.  It is tough to do foreign policy by committee, but we don’t really have a choice.

 

This is by no means a complete list, but we have to recognize that government is in crisis and needs a bipartisan effort even to mind the store.

Sacrifices to the Gods of Jobs

Since the election there has been a continuing focus on the “Trump core voters”–people whose standard of living plummeted after the loss of good unionized industrial jobs.

During the campaign Trump’s story was that the jobs were lost to unfair trade practices, and that the cures were tariffs, deportations of immigrants, and abandoning NAFTA.  In the months since Trump assumed office, his emphasis has shifted.  China is our friend, the NAFTA discussion is on hold, and all the stress is on prosperity to be created through a huge tax cut for the rich.

Few economists believed the first story (most put the emphasis on technology change), and even fewer believe the second.  All of that, however, makes it even more important to understand what is actually going on.

The message here is that the problems of the “Trump core” are not isolated, but emblematic of fundamental trends in American society.   And Trump’s currently-proposed cure is more a problem than a solution.

 

We begin by referencing a recent article which points out how the problems of the Trump core voters fit squarely within the context of the decline of the middle class.

There is in fact no mystery about what is going on.  US society has been changing in fundamental ways, and those changes include a number of separate trends:

– The Trump core voter issues

– Underfunding of education, including a huge rise in the cost of college

– Infrastructure decay

– Decline of the middle class

– Vast increase in wealth inequality by any measure

– The Tea Party and Donald Trump

Briefly stated, the country is losing the public infrastructure necessary to maintain the middle class.  That trend is fundamentally tied up with wealth inequality, and in fact there is feedback that is accelerating both the inequality and the middle class decline.  Part of the problem is familiar “trickle-down economics”—the historically false idea that giveaways to the rich produce jobs—but the current version of it has reached a stage where it threatens the country as we know it.

To see that we go through the items one-by-one:

  1. Trump core voter issues

In any analysis of the problems of Trump core voters, the interrelated factors of globalization, technological change, and deunionization all play a role.  Industry world-wide (even in China) has moved up the technology curve, and good jobs demand more education and skills.  Workers without such skills are at the bottom of the heap:  competing for scarce jobs with no leverage and without union support.

This is not the first time that the US has experienced such transitions—think of textiles in New England.   Such dislocations are hard and can take time.  It is the role of government to provide support, retraining, and incentives to reestablish the economic base.  Education in particular is critical, both for the job-seekers and perhaps even more for their children.  In the current environment there has been little money or appetite for any of that.

The Trump budget in fact cuts essentially all such support in favor of nothing but more “tickle-down”—cut taxes on the rich and everything will be great.

  1. Education

The problems with education, however, go beyond the Trump core voters.   In the current economy (as just discussed), education is the key for most people to join the middle class, and we are making that harder than ever.   Many states have cut back on education budgets across the board.

The most obvious example, though, is the huge rise in college debt coming from rising tuition even at public colleges.  Even though college is for most people a prerequisite to a good job, we are making that a tough gate to get through.  As a society we have effectively abandoned our commitment to free public education.  And if there is any single thing that is important in “making our country great” it is education.

  1. Infrastructure decay

Like education, this is an example of refusal to fund the public good.  In the Presidential campaign both Trump and Clinton raised infrastructure repairs as an issue.  Further, since infrastructure work is personnel intensive, it can be a means of dealing with the transition issues discussed for Trump voters.  However, really doing something means significant money must be spent.

Despite Trump’s pronouncements on the role of the private sector, there is no way to make this happen without government spending, and it remains to be seen if there is a will to do it.   (Trump’s budget has seed money for privatizing bridges and airports, but the program is far from clear.  There’s no guaranteeing what will get done, and the opportunities for corruption are very large.)

Moreover for the middle class, infrastructure isn’t limited to just roads and airports.   There are many factors, including such basics as healthcare and childcare, which have a role in the viability of the middle class.  There is currently little support for any of it.

  1. Decline of the middle class

The previous points described some of what has been lost for the middle class.   And statistics show the result.   It has become harder to get in (and even those that do can have crushing debt), and harder to stay in if anything goes wrong.  Far fewer people now think their children will make out better than they did.

We also have examples of pending Trump administration programs that will make matters worse.  Healthcare, judging from the House bill, will become more uncertain and expensive, particularly if you are elderly or have pre-existing conditions.   For education, DeVos has already made things worse for student debt, and her voucher program will deliver for a payoff for people who already have kids in private schools, but has no commitment to delivering quality education for all.

All told pretty grim.

  1. The role of inequality

To start with, it is important to recognize how drastically things have changed in this country—for example from 1980 to 2014 incomes of the top 1% have tripled in real dollars, but incomes of the bottom 50% were unchanged.  And the effect actually was more pronounced the higher up the ladder you go–the increases for the top .01% were significantly greater than for the top 1 %.

As usual more money buys more power, and we’ve now reached the stage where even individuals (super-rich ones like the Koch brothers, Robert Mercer, Betsy DeVos) can dictate public policy.   That effect was enhanced by the Citizen’s United decision, since they now have unlimited ability to affect elections.   Overall–more money drives legislation favorable to the elites, which in turn makes them ever richer and more powerful.

There have been two primary parts to their message:

– Opposition to government social welfare programs of any kind (“governments can do nothing”).

– Pressure for tax cuts for the wealthy (“we are the job creators”).

The first attacks low and middle class programs (even education)—which they don’t want to pay for.  (Robert Mercer, one of Trump’s primary backers, famously said that people on welfare are worth less than cats.)  The second drives increasing inequality—more and more wealth and power for the elites (i.e. Trump and his cabinet).

  1. The Tea Party and Donald Trump

Ordinary “trickle-down” economics has always offered a historically false promise—cut taxes on the rich, and things will get better.

With the Tea Party and Trump we seem to have gone one step further.  Great sums of money have gone into promoting the idea that since jobs come from the private sector, the only way to have jobs is to let the private sector do everything it wants.  Jobs are gifts from the “job creators.”  Getting more jobs means doing everything possible to keep the job creators happy.  Government can only get in the way.  The recipe for more jobs is tax cuts for the job creators (corporate and personal) and elimination of programs that might disturb them (or take money they might otherwise get).  We must keep up the sacrifices to the jealous gods of jobs.

That message runs counter to both logic and history.  Corporations don’t hire people because they are happy or grateful; that would be incompetent and bad business.   They hire based on growth opportunities and in locations that suit their purposes.  And government has a lot to say about conditions for growth and how people will actually benefit.  It is precisely the elements of the public good—education, infrastructure, research—that create the environment that makes for our success, both as a country and as individuals.  The economic successes of Silicon Valley and the current centers of biotech didn’t come from their being the cheapest and most docile places to do business. Historically, overall economic performance under Democratic administrations has actually been significantly better than for Republican ones by essentially all measures.

Nonetheless, the simplicity of the message has led to its overwhelming success.   It has become so powerful, that when it fails we only get more of the same.   We have now been through several cycles of:

Tax cuts for the rich and reduced funding for social programs =>

Reduced support for middle class people to succeed =>

Fewer people in good jobs =>

Even more tax cuts for the rich and cuts to programs

That is basically how we got from the Tea Party to Trump.  The Republican Congress tried desperately to repeal the Obamacare surtax and blocked all attempts at social welfare legislation—including initiatives for early childhood education and community college support.  That paid off with Trump elected on a spurious jobs platform that has translated in the budget to extreme tax cuts for the rich and even more drastic cuts to all services.

The “jobs are gifts” fiction has now reached the level of religious fervor:  we must be ready to sacrifice all (environment, education, minimum wage) to the corporate “job creators” so that they will grant us jobs.  Trump’s budget effectively does just that.

“jobs are gifts” is like quicksand—you can’t get out.  We can’t stop the decline of the middle class, because if we stop giving to the rich they’ll take our jobs away.  So we continue to spiral down to a two-tiered society with a growing gap and little in between.

As always with “trickle-down” economics, the sacrifices are real but the promises are not.  There is no cornucopia of good jobs coming to the “Trump voters” or others looking for middle class income without education or skills.  Nothing in Trump’s budget will fix mismatches of jobs and skills, but the tax cuts are real money.

In fact with the specifics of Trump’s tax plan, things look decidedly bleak.  With huge deficit spending at this stage of the business cycle we are inviting another crash on the order of 2008 or worse.  We survived 2008, because the people in charge knew enough to act countercyclically.   We won’t have that luxury this time, which is exactly what happened in 1929.

 

On the other hand if we can overcome the “jobs are gifts” fiction, the world suddenly looks brighter.  That’s not to say all the problems will go away, but at least we can systematically make things better.

First of all, it isn’t that hard to fix things.  The country is prosperous, but the prosperity has been accompanied by dramatic inequality.  We need to broaden prosperity by broadening opportunity, similar to what happened in the fifties and sixties.  History has shown that contrary to the “gift” fiction, broadened prosperity actually helps rather than hinders growth.  Education, research, and even (with global warming) the maligned EPA are keys to growth.

Second, despite all the penny-pinching gloom, we do have the resources to make it happen.  The straitjacket we’re in now is of our own doing.   There are many examples.

Republicans like to talk about the impending entitlements disaster:  Social Security and Medicare.  In fact neither is unmanageable.

Social Security is self-funded, but it is currently paying a portion of benefits out of past savings, and in 2034 that pot of past savings will be exhausted.   However what happens in 2034 has been much exaggerated–current funding would continue to pay 3/4 of benefits for the foreseeable future.   (“Social Security is bankrupt” is another trick of language, falsely implying there will be nothing after 2034.)  For the remaining 1/4, one first notes that the Social Security payroll tax has become increasingly regressive–the tax is paid only on the first $118,00 of income, and with the growing wage inequality a higher and higher percentage of earnings is outside the cap.  Doing away with the earnings cap is estimated to cover benefits for an additional 30 years—at which point no one knows what the demographics will look like.  That isn’t necessarily the best solution, but it shows that solving the problem is only a matter of will.

As for Medicare, the issue–rising medical costs–is the same problem faced by every developed country and every insurance company in the world.  There’s no way that problem isn’t solvable.

In fact with growing income inequality, the tax system has become more regressive overall, and it takes surprisingly little adjustment to save the middle class.

Current personal income tax tiering is simply out of whack with the magnitude of the incomes built up by growing inequality.  Also, despite the dire predictions of the “jobs as gifts” fiction, there is no evidence that taxing high end personal incomes costs jobs.  Obviously there are many things worth fixing in the tax code, but it doesn’t take high risk or rocket science to generate money to save the middle class.

As to getting there, you might (or might not) say:  the only thing we have to fear is fearmongering itself!  Unfortunately there is a lot of it:

– Citizen’s United—lets individuals put limitless money into politics (“Jobs are gifts!”, “Governments can do nothing!”)

– Limitations of the press—entertainment seems to win out over substance

– Demagogues and politics of identity—unfortunately always a danger in democracy

One can only hope that people will come to realize that “jobs are gifts” is just a trick, and that divisiveness and scapegoating are conscious techniques of some members of the .01% to divide and conquer the broader population.

We have to be very clear this is not anti-business.  Historically what works is to have government and business as countervailing forces that keep each other honest.   That’s what gave us prosperity in the past, and what is clearly (explicitly) out of kilter in the present.

The one good thing you can say about the present state of affairs is that perhaps it is the cathartic moment that lets people realize that the grim worldview is false, that they don’t have to be fighting with each other for shrinking crumbs from the elite, and that broader prosperity is not only possible, but actually doable.

Trump’s 100 Days – Threats We Now Know

There have been many articles celebrating Trump’s lack of progress despite Republican majorities in both houses of Congress.   There are two problems with that:

  1. We should not be confusing tactical victories with permanent success, as there are still years ahead.  (If you want to be pessimistic, you could even say that Trump doesn’t concern himself much with Congress, because if he gets another Supreme Court judge he won’t have to.)
  2. We are doing Trump a favor by focusing criticism on his tactical failures. What’s bad about Trump is his program, and if he hasn’t been very successful at getting it done, so much the better.

With that as introduction, the major takeaway from Trump’s first 100 days is not what didn’t happen but what we now know about what is to come.  This post hits a few particularly painful points on that list.

Climate change

This is an issue where orthodoxy has thus far taken precedence over any kind of rational decision-making.  As things stand Trump is blocking all climate change research or even discussion, thereby not only impeding progress on a critical international issue but also effectively handcuffing US businesses in competing for the monumental work that will need to be done.

The only glimmer of light is that Trump has not yet decided what to do about the Paris agreements.   With that there may be some chance for reason.   No business could ever run this way—head in the sand on an issue critical for its future.   Given the level of support among scientists, climate change cannot seriously be dismissed as a hoax.  And given the huge threats and business opportunities it poses, we should be after all the data we can get.   You’d think there was some rational business person in the White House?

The economy

It seems strange that with a President elected for his business background, we have a clear potential for economic disaster.  The problem is that Trump acts with the same impulses built up over the years of running his own business:  taxes and regulation are bad, stimulus is good, research is irrelevant.  The fact of being President has not changed his point of view.

Trump’s new tax plan looks like a classic case of bad management:  huge unbudgeted stimulation of an economy already moving toward full employment, producing unsustainable deficits, leading to a shutdown of government spending, and then a crash.  On the Congressional Republican side, despite all the balanced budget hawkishness of the past, it seems no one is watching the store.

There are of course other problems as well.  Trump’s fixation on traditional businesses discounts the real sources of the country’s economic strength.  Non-competitive, non-unionized businesses selling only domestically at artificially high prices will not make this country great—there’s nothing keeping that boat afloat.  The US has maintained dominance by staying ahead of the innovation curve—based in significant measure on government-supported research.  In that respect cutting the NIH budget is incredible given the importance of biotech.  Energy research is equally important and fares even worse.

Trump-promoted xenophobia counts here also.  For many years the US has attracted the best and brightest from all over the world, as the perceived best place to realize their dreams.  As has been much discussed, more than half of Silicon Valley companies have non-native CEO’s.   As a telling symbol, we should remember that Steve Jobs’ father was a Syrian immigrant.  Trump has torn up the welcome mat, and we will pay.   This is already not just theory.

Jobs

Trump presents himself as the jobs President, and astonishingly many people still believe him.  However there seems to be only one kind of job he is interested in—low skill, low wage jobs in price sensitive industries.  Those are the “stolen” jobs that he has convinced people he can bring back.  Trump made a big show of supposedly reviving coal mining, but had no time for the three times as many jobs in alternative energy.   Even more to the point are his proposed budget cuts for successful Appalachian job training programs.

Trump’s fixation on reviving old-time factory jobs makes him the bad jobs President.  Manufacturing has changed since the “stolen” jobs went away—they are now high-tech (and the immigrants didn’t steal them).  The fewer low-tech versions—most certainly in non-union states—are not what anyone has in mind.  There’s nothing that prevents economic revival in Appalachia and elsewhere, but there’s an essential role for government in making that happen:  education, retraining, and incentive to locate.   Trump’s much-discussed solutions–tariffs, relaxed regulation, expulsion of immigrants—don’t even address the problem.   Trumps proposed tax cuts are a windfall for the richest of the rich, but no salvation for the blue-collar types claims to represent.

On jobs Trump has been selling a particularly insidious message:  that jobs are gifts from business, and for that reason any regulation or taxation immediately translates to a loss of jobs.  Therefore government has no power to do good and must just stay out of the way.

That is an easy story to sell–and particularly to people worried about their jobs—but history has shown it is manifestly false.  Government action, including regulation, is necessary for prosperity.  Business by itself will not deliver a high standard of living, an educated work force, an unpolluted environment, a research base for continued economic power.  Jobs come from providing all conditions for economic growth, and good jobs need both good government and good business.  States with strong economies work that way.

Trump is inviting us to a race to the bottom:   Let’s stake our future on competing with China, Korea, Mexico to make the same products everyone else does.  And if we have to throw away environment, education, healthcare, unions—heck that’s what it takes to make America great!  (The much-discussed book Strangers in Their Own Land gives a telling picture of where that argument leads.)

Education

Education is as crucial as anything you can think of for the standard of living in this country and for anyone’s definition of making America great.  The Department of Education, however, has been sold to a rich ideologue.  As has been pointed out, Betsy DeVos is the first Education Secretary to be opposed to public education–her stated aim is to put as many children as possible in religious schools.  Her program–as she shoved it down the throats of several midwestern states–has not produced results (including in her own state of Michigan).  Further, her objective–a fully privatized school system with vouchers but no regulation of schools–is characterized by:

– No standards for schools

– No constraints on student selection by schools

– No constraints on tuition cost—the voucher just pays what it pays

Incredibly this is complete segmentation of opportunity based on ability to pay, with no one responsible for the quality of what is delivered for the voucher fee.

Since all of this is well-known, one can wonder why she had only token opposition from Republicans at confirmation.  That question unfortunately has a clear answer:  this was a matter of party principle—the office was paid-for and delivered.

(Since confirmation DeVos has also rolled back efforts to deal with student college debt without an alternative proposal.  This is a real problem for the country, as even state universities have become much more expensive in the last decade.)

Healthcare

We now see the alarming spectacle of healthcare being deliberately sacrificed to a program of tax cuts for the rich.

Protecting the environment

The EPA is now put at the service of the people it is supposed to regulate.  All academics have been removed from its Scientific Review Board to be replaced by business people.

Equality and equality of opportunity

Trump is proposing three different tax cuts explicitly for the rich:

  1. Repeal of the Obamacare-financing surcharges.
  2. Reduction of the business income tax with proceeds passed through to investors
  3. Reduction of high-end tax rates together with a new loophole for private companies

Trump gleefully predicts all of this will be revenue neutral, because of the huge growth that will follow.  No one else thinks that’s true, so what it will mean is a reduction of government services (note that the Republican Healthcare plan is not self-financing like Obamacare—it is just another vulnerable budget item) and ultimately more taxes for the middle class.

Democracy in America

Trump’s congratulations to Erdogan in Turkey and praise for Duterte in the Philippines tell you everything there is to say about Trump’s respect for democracy.  With one more Supreme Court appointment we may find that we are in a war on terror, where the President as Commander in Chief can do as he sees fit.

We just have to hope that Ruth Bader Ginsburg can hang around for the duration.