Nationalism grows as world shrinks, undermining democracy and international agencies

 

Gordon L. Weil

As Covid-19 begins to wane, much speculation is devoted to the “new normal” that will emerge as life without hyper-caution returns.

But, on a grander scale, the world, which had accepted a new normal, is shifting back to the old normal.  Though that may seem beyond the daily lives of average people, it directly affects us.

After the World War II defeat of nationalistic and aggressive dictatorships, the winners began a movement to liberal democracy, in which the people rule, and toward cooperation among nations through international organizations.

The result was the growth of democratic governments, most notably in Western Europe, where two world wars had begun, and in parts of Asia.  The new normal worked as both Germany and Japan could achieve prosperity without military domination of other countries.

The United Nations began to function as a peacekeeping organization and Europe worked toward an economically interconnected community that would make impossible future wars among neighbors. The U.S. backed these efforts. 

American policy was based on the premise that prosperous democracies would be good partners and good customers, both helping to maintain a stable world order.  With strong allies, the U.S. could contain the Soviet Union, which otherwise would try to extend its authoritarian rule.

The new normal saw democracy rising, cooperation functioning and a group of nations, led by the U.S., able to reduce, though not eliminate, local wars. The high point of this international system came with the collapse of the Soviet Union in 1991.  One philosopher concluded that the world had reached “the end of history.”

If there was ever an incorrect observation, that was it. There were countries and people the new normal simply did not suit.

China, with the world’s largest population in the fourth largest territory, rejected a militarily weak and economically poor position.  Increasingly, its authoritarian government became more assertive, financing its efforts at expansion using American dollars it had earned in trade.  It pursued more territory and more power.

Russia, the chief remnant of the Soviet Union, was offered the chance to join the community of democratic states.  Instead, its leaders lamented the loss of their power in world affairs. The government increasingly took outlaw steps to undermine the U.S.

The European Union made great progress toward integrating national economies, but its increased powers created some unhappy participants.  Cooperation slowed and national forces resisted regional decision-making. Trump scorned it, and the community weakened when the U.K. unwisely chose to withdraw, even at great cost to its economy.

That withdrawal, commonly known as Brexit, is symbolic of the rise of nationalism in many countries.  It grew partly from dislike of major domestic decisions made by foreign leaders and international organizations. Nationalism had not disappeared even while cooperation had grown.

Finally, in many countries, the prosperity that resulted from the new order left many people out.  The rich got richer, but many people became populists, believing themselves denied the benefits of the booming economy.

The U.S. remained the model of democracy. It was recognized as the only superpower, able to project its influence anywhere and at will.  Then, to its surprise, when Americans thought stability had been achieved, the U.S. suddenly found itself again at war as the result of the terrorists of 9/11.

Faced with the threat of terrorism and the aggressiveness of China and Russia, the U.S. joined in the trend toward nationalism.  Its revival became obvious under the Trump presidency, as international accords were abandoned. “America First” almost went as far as “America Alone.”  Healthy patriotism was being overwhelmed by unhealthy nationalism.

Support for Trump’s approach was sometimes written off as racist.  While it was clear his policies gave racists comfort, he capitalized on populism that readily blended with nationalism. People believed their country was exploited by other nations at America’s expense, failing to understand that world leadership imposes a cost.

President Biden is now seeking to revive the post-war new normal by rejoining the international community and trying to address the economic disadvantages of the middle class and poor.  Future elections will reveal if he can succeed.

Why does all this matter?

Thanks to the Internet and the airplane, the world has become a smaller place.  As much as globalism is under attack, it is inevitable.  Dictators, even in North Korea or Syria, can cause events that affect Americans.  What happens anywhere may have effects everywhere.

What people pay for clothing or electronics or taxes to support a huge defense effort are determined by global conditions.  When major nationalist powers rub against one another, the friction creates the risk of war.  Wars leave temporary winners and volatile losers, preventing stability.

The world is too small to allow for American withdrawal.  Nationalism is not the solution.

 

Politicians misuse statistics, make ‘snapshot’ analyses: Employment numbers, Trump election

 

Gordon L. Weil

If you think you can’t do numbers, beware. This column is about numbers.

But it reveals that you are not alone; many people, including some we rely on, can’t do numbers either.

We attach great importance to conclusions supported by numbers. Whether it’s about elections or employment, if there’s a number involved, we may often accept it as reliable and authoritative and not merely a matter of opinion.  That can be a mistake.

Take last week’s unemployment report.  The media stressed that the number of new jobs created in April was well below the economic forecast.  One outlet even congratulated itself for having foreseen that “April was not going to be a jobs boom, but instead, a jobs bust.”   An estimated 266,000 new jobs is “a bust?”

Conventional wisdom began to question if the economic recovery was slipping or the stimulus was a flop.  Optimism could swing to pessimism based on a solitary number that supposedly reported that fewer new jobs were created than had been forecast.

The media reported that the employment numbers fell below the expectations of “most economists.”  Obviously, that was not true, given the hundreds of thousands of economists, most of whom weren’t asked.  Who chose the economists whose opinions were used?  Are they qualified? Biased? 

Even if they were objective, does averaging the opinions of a relative handful of economists produce a gold standard jobs forecast?

Then, there’s the monthly report on new jobs and the unemployment rate.  It is produced by the Bureau of Labor Statistics, a federal government agency that enjoys a good reputation for being competent and staying out of politics.

The BLS does not count each individual.  It uses surveys that, nine times out of ten, will be accurate within a range of possible results. Could this be the tenth time? And the width of the range in the BLS surveys could be larger than either the change in the number of jobs or the monthly variation in the unemployment rate.

Political leaders and the public don’t know exactly just how many jobs were created or how good the base forecast was. Because the same process is used every month, perhaps the best we do is make an educated guess that some jobs were created, but fewer than in the previous month. 

The employment results could raise questions about any new jobs legislation. National policy may change as a result of one month’s rough statistical finding, which flies in the face of all those “help wanted” signs we are seeing.  We are reading too much into the numbers.

If he really believes that he won the presidential election, Donald Trump is a victim of reading too little into the numbers he gets.  The numbers here are individually counted votes, not the result of a survey.  But they don’t seem logical to him, so he assumes they must result from massive cheating.

Trump received more popular votes than any other candidate for president ever, except for Joe Biden, who now sits in the White House.  Trump must find it hard to accept that the huge voter turnout helped Republican congressional candidates, but not him.

Mainly because of the coronavirus, states allowed for increased absentee voting. Trump believes that Biden’s huge vote is out of line and cannot be believed, and that absentee voting created the conditions for cheating on his behalf.  He also supports a few more fanciful causes to dispute the result.

That’s Trump’s logic, despite the fact that all the independent reviews show that there was no cheating that could have changed the result.  Republican election officials certified Biden’s votes.

The increased number of voters can readily be explained. The total population and the number of people of voting age increases with each election.  This time, with opinions sharply divided, it looks like more young people and women chose to participate. 

Believing only the numbers that support your expectation and ignoring those that don’t is called “confirmation bias.”  Most charitably, that’s what has happened to Trump.  He believed in the inevitability of his reelection and accepts only results favorable to him.

If only Trump’s results make sense, Biden must have cheated. That reasoning is enough and no evidence is needed.  None was produced.

Even if Trump is sincere, though misguided, his selective use of numbers endangers the democratic system of popular control by his prolonged attempt to undermine confidence in it.

The problems with excessive focus on numbers occurs almost continuously. Polls appear daily and are subject to instant interpretation. We can then jump to conclusions based on questionable “snapshot” data.

One daily national survey recently headlined that more Whites, Hispanics and suburbanites disapprove of Biden than when he took office.  It did not highlight that the same survey showed those groups also increased their approval of him.  The real news was that undecided people were making up their minds and that his overall national backing grew.

It’s not only polls. The New York Times revealed that the CDC had just found that there was less than a 10 percent chance of getting Covid-19 outdoors, when the data showed it to be far less likely.  The government agency used an excessively conservative number to protect itself from criticism that might later arise from any possible error.

Even though roughly true, the numbers were presented in a way that protected a government agency at the expense of giving useful information to the public.

Numbers can help in understanding what’s happening and when.  They can identify trends, though not on a daily basis as some polls do.  But, if accepted uncritically, they can provide a false sense of certainty.

Public attitudes and activities are influenced by actions, events and biases.  Numbers can be helpful in getting at the truth, but they are not the only thing that counts.

 

 

 

 

Biden’s tax increase on wealthy, corporations won’t depress economy, will create jobs

Gordon L. Weil

If President Biden raises taxes on the wealthiest people, will you lose your job?  Or pay more taxes even if you are not wealthy?

Opponents of tax increases on the top one percent sometimes make it sound like the rich don’t mind paying taxes, but worry that if the federal government raises their taxes, they will have less to invest in creating new jobs.  Using that hammer, they bang the loudest political gong: “Jobs, jobs, jobs.”

This claim may sound reasonable.  If my taxes increase, no matter how low they might have been, I will have less money to invest.  With less capital flowing into the economy, there will be less need for labor to do the work.

The problem with this seemingly logical assertion is that it has no basis in fact.  Beware of economic models that forecast negative effects from taxation; their assumptions are set to produce the results their sponsors want. They may forecast an economic cost, but they fail to explain how public needs would be met without tax revenues.

Besides, how can Americans be sure that untaxed income will be invested in job-creating activities?  In passing the Covid-19 stimulus bills, Congress had to ban corporations from using the money they received to buy their own stock, thus raising its price.  Corporations had done that with previous stimulus laws without creating new jobs.

Another use of non-taxed gains has been to raise the pay of top executives. The result is the widening income gap between the wealthiest and the average working person.

The claim about harming jobs is false because tax dollars mainly fund purchases in the private economy, which creates jobs. If the government takes in less, as it did in the last administration, it should spend less.  Deficits grew and the federal workforce increased under President Trump.

As for spending, payments for Social Security mostly go to people who then spend almost all of what they receive on consumer purchases. Retail sales are by far the largest driver of American economic health.

Defense spending is a large part of the budget.  Members of Congress fight for military bases and construction in their states and districts as much for the jobs they support, putting spending money in people’s pockets, as for the weapons and bases needed.

In fact, the major role of the federal government as a customer in the national marketplace is one reason why presidents try to take the credit for a strong economy.

The wealthiest people and the largest corporations may also claim that they are already subject to tax rates among the highest in the world.  They argue that it simply would not be fair to undercut them in direct competition with others.

This claim is false. The U.S. corporate rate is less than in all other leading free-market countries, except the U.K.  If Biden gets what he seeks, the combined rate of state and local taxes would still be less than it was under President Obama.

The supposed impacts of higher rates may not matter.  Biden proposes raising the rate on capital gains, though not to the level under Obama. The New York Times reported: “Investors care more about economic data and corporate profits than an increase in the capital gains tax. It has usually been this way.”

Biden moves the country closer to asking if there is any good reason to tax workers’ incomes at a higher rate than investors’ gains. In Maine and other states, the capital gains rate is the same as the same top regular income tax rate. The federal capital gains rate is much lower.

Complaints about tax increases gloss over the difference between the formal rates and what the wealthy and big corporations really pay.  Welcome to the rich and fertile land of loopholes.

While the rates enacted by Congress get much media attention, the little-known exceptions in the law or those authorized to be developed by the IRS result in those rates being much lower in practice.

In his first speech to Congress, Biden said, "A recent study shows that 55 of the nation's biggest corporations paid zero in federal income tax last year.”  

Wealthy individuals may do the same.  In 2020, ABC News reported, “The tax-avoidance strategies that President Donald Trump capitalized on to shrink his tax bill to essentially zero is surprisingly common among major real estate developers and other uber-wealthy Americans.”

Biden speaks of the non-payers coming up with their “fair share.”  How much is that?  Whatever it means, a “fair share” is likely to be something more than zero.  However, their political contributions and lobbying can get the non-payers loopholes that nullify any tax rate.

Add to all of this the almost total elimination of the inheritance tax.  One of its purposes was to collect some taxes from the wealthy that had benefitted from loopholes.

In the end, somebody has to pay for necessary government spending. If some get tax breaks, others have to pick up the cost. Tax policy is not really about jobs; it’s really about who pays.

 

Three ways to restore Supreme Court balance without ‘packing’

 

Gordon L. Weil

Note to readers.  Posts on this site are also available by email from Substack.  Just enter "Weil's Notes from a Corner of the Country" on substack.com  and you will be able to sign up for regular emails.

“It ain’t broke, so don’t fix it.”

That version of the old saying is what most Republicans and some Democrats think about the Supreme Court and the proposal to increase the number of justices on the Court.

Most Democrats in Congress believe it is broken and that former GOP Senate Leader Mitch McConnell did it.  He led the Republicans to block many of President Obama’s federal court nominees plus changing the rules to ease confirmation of President Trump’s Supreme Court and other judicial choices.

They charge that McConnell packed the Supreme Court with conservatives and now is the time to rebalance it with their own packing. Congress has the power to add new justices to reduce the influence of the relatively young conservative newcomers who may enjoy decades on the bench.

In 1937, Democratic President Franklin D. Roosevelt was faced with a majority of conservative holdovers who sometimes thwarted his recovery moves.  After his stunning re-election victory in 1936, he proposed adding more justices.  The Court majority then shifted, making packing unnecessary.  “A switch in time that saved nine” was the quip of the day.

Roosevelt’s proposal had met some opposition, and he ignored history. John Marshall, perhaps the most influential Supreme Court justice ever, was a Federalist holdover for decades after his party fell into oblivion.  But presidents of the party in power did not propose Court packing.

The problem today is that the Court needs to be fixed.  Unlike the Marshall or Roosevelt situations, the Court majority was not the result of the natural course of history. It is the result of the obvious finagling by an excessively partisan McConnell.

President Biden is naming a commission to suggest a fix. Adding justices is a possibility, but the obvious concern is that increasing the size of the Court could be proposed after every presidential election.  Besides, Congress probably wouldn’t approve an increase.

The current Court, with six conservatives and three liberals, is likely to continue unchanged.  Justice Stephen Breyer, a liberal, is being urged to retire so Biden can appoint his replacement.  Otherwise, as when Justice Ginsburg died with Trump in office, a liberal might later be replaced by a conservative.

Even though the current balance cannot readily be altered, reasonable changes may be possible. They could reduce the threat of partisan wars spreading further into the Court.

The first reform could come in the Supreme Court itself.  In many decisions, it must interpret the law and settle on just what Congress intended.  Conservatives can decide what liberals meant.   That’s really legislating when it determines how the law will be applied and rules out other approaches.

Why do that?  Congress is just across the street and open for business.  The Court could decide on its interpretation of congressional intent, but delay the effective date of its decision for six months. During that period, Congress would be on formal notice either to amend the law, resolving the issue, or to do nothing and let the decision stand.

In that way, decisions might be taken from the hands of an unelected holdover Court and given to a current Congress.  Under the Constitution, Congress itself has the power to control the Court’s jurisdiction, so it might itself be able to adopt this requirement.

Another reform, this time in Senate rules, could prevent McConnell-type moves. Judicial nominations could be required to allow for a minimum of 60 days review, including committee hearings and investigation of nominees, with a decision by the full Senate after no less than 90 days.

Because federal judges receive lifetime appointments, they deserve careful review before taking office.  Senate confirmation may be as much about their proven competence to make decisions often affecting all Americans as their political philosophy

Finally, as previously suggested in this column, the president and Congress could agree on making temporary appointments to the Supreme Court, just has always been done for lower federal courts.

A new slot on the Court would be created and filled by the usual lifetime appointee.  The Court would be enlarged only until one of the original justices ended their service.  At that point, the temporary slot would disappear and the justice in the temporary position would take the permanent seat.

With both Congress and the presidency now under Democratic control, this might be a more acceptable approach for skeptical Democratic senators, such as West Virginia’s Joe Manchin and Arizona’s Krysten Sinema, than is enlarging the Court.   It could set a precedent for a time when there is a split in control between the Senate and the White House.

To his credit, Chief Justice John Roberts seems intent on keeping the Supreme Court from being reduced to a partisan forum.  That is a worthy goal, and the Court, Congress and Biden’s commission need to take that same long view and protect the Court’s independence.

 

 

 

History becomes a weapon; partisans pit “cancel culture” against “politically correct”

 

Gordon L. Weil

 “That’s all she wrote.”

In explaining this familiar American sentence, a British authority wrote that it means, “it's all over; there's no more to be said.”

That’s what we used to think about history.  You found out what happened and wrote a big book about it.

While that belief was never true, it is now strongly rejected.  These days people take a new look at history in an effort to realign the past with present opinions.

It can result in misjudging historical leaders.  New research and experience may help us understand what they did and why.  But we might also measure them using standards likely to have been unknown to them.  Or we may resist any new historic understanding and continue to glorify the past.

The most obvious case of taking a new look may be the elimination of the Confederate flag on  state banners and the removal of statues of rebel leaders. They have been memorials to an armed attempt to preserve slavery and destroy the Union.  Venerating them amounts to keeping the rebellion going.

While eliminating the symbols of an unjust and inhumane cause is reasonable and necessary, it leads to confrontation between those defending the symbols, supposedly because they are part of history and those opposing them in light of a reinforced awareness of their lingering effect. As a result, they become elements of today’s political clash.

At the time that slavery was acknowledged in the Constitution, most drafters knew it was wrong.  But they regarded it as necessary to ensure the participation of southern states, which believed it essential to their economies. It lasted until the Civil War and, in practice, a century more.

Even at the outset, one general saw it differently and upon his death, his slaves were freed.  Six decades later, another general led his state’s soldiers in rebellion against his own country to preserve slavery.  Both were Virginians and both are respected. Washington and Lee University recognizes them. Only one deserves a statue.

Taking a new look at Robert E. Lee to deflate his high reputation may be seen as “cancel culture” by those who believe he should be honored for being committed to a worthy cause and a classy loser. 

Giving new consideration to the historic role of leaders makes sense, provided today’s analysis takes into account human understanding and sensitivity as it existed at the time.  To reject such analysis, which some dismiss as “cancel culture,” is dangerously simplistic. 

The term “cancel culture” is not just about fighting to preserve history. It is a rallying call for those people who support discredited movements or events and amounts to barely disguised support for lost causes.  Its advocates misleadingly dismiss their critics as merely being “politically correct.”

On the other side, those who simply condemn historic figures based on their own current views also misuse history. They resort to shortcuts that are meant to appeal to their audience.

The heated debate is selective, based more on today’s politics than on a broad, new look at accepted history. The cases pulled out for new consideration or subjected to claims of “cancel culture,” are more likely to legitimize the current political needs of their partisans rather than being part of an academic effort to reappraise past scholarship.

Today, some people may be shunned as objects of “cancel culture” because of their past statements or writings. If they persisted, shouldn’t they be rejected?  If they repented, do they deserve still to be rejected?   (Still revered, Lee never repented.)

Recently, the head of Planned Parenthood wrote one of the most balanced views of a troublesome history during these times of “cancel culture.”

Margaret Sanger was a nurse who opened the first clinic dedicated to birth control in an effort to promote it as a way to improve women’s lives.  She founded Planned Parenthood and gained a widely, but not totally, favorable reputation.

Beyond women’s health concerns, she saw birth control as a way of limiting the growth of the Black population and associated with white supremacist groups.  She also supported a Supreme Court decision allowing the involuntary sterilization of “unfit” people and testing a birth control pill on unsuspecting Puerto Ricans.

“Sanger remains an influential part of our history and will not be erased, but as we tell the history of Planned Parenthood’s founding, we must fully take responsibility for the harm that Sanger caused,” Alexis McGill Johnson, the organization’s president, wrote.

If the furor over “cancel culture” has brought more attention to understanding our history, including Sanger’s conflicted role, it may be useful.  Debating the past educates us, and that’s needed, because schools pay too little attention to American history and civics.

Frequently, leaders hail the shared “values” that supposedly unite all Americans, but then skip the sometimes clashing specifics of how they played out in history. 

That failure leaves people ignorant of history and vulnerable to political exploitation.  It allows “cancel culture” to flourish and history to be used as a weapon.

 

More federal debt without new taxes means big tax hike later

 

Gordon L. Weil

How are we going to pay for all this?

In March, the monthly gap between federal spending and revenues was the third largest in U.S. history.

Whether Donald Trump or Joe Biden is president, federal spending keeps climbed. But raising the money to pay for it has been lacking.  Even worse, under Trump spending increased and taxes were cut.

Congress had made a deal that, aside from fixed benefits, military and non-military expense would be kept about equal. That deal was broken by Trump, who boosted military spending with GOP support.  He also paid billions to compensate farmers for the negative effects of his trade policy.

Biden has proposed about $2 trillion in infrastructure spending. Last week he released his proposed budget that would boost federal spending to move toward restoring the budget deal without military cuts. Both he and Trump spent without restraint to combat Covid-19, the main cause of the March deficit.

The U.S. is now using the word “trillion” routinely.  The old saying, attributed to several political sources, was “a billion here, a billion there, pretty soon it begins to add up to real money.”  “Pretty soon” billion will be replaced by “trillion.” 

The problem is paying for it all.

The Federal Reserve can create money.  When the coronavirus hit, it did just that to pump funds into a faltering economy and staved off a recession.  But that kind of support is temporary and is really only a loan.

There is only one ultimate answer. The people who pay the taxes will have to pay the bill.

Are taxes already too high? 

The political mantra is that the government is taking too much of your “hard-earned money.”  Taxation is undesirable and reduces your ability to decide how to spend your own money.  The mantra is mistaken.

Only about 57 percent of households pay any federal income tax. The rest of the households, mostly the poor and part of the middle class, have no income tax liability. A small percentage of the wealthiest households also pay no income tax.

The amount of money the government will recover in taxes is partly determined by what Congress decides upon as the activities and actions it wants to support.  So tax revenues buy things decided by the representatives of the taxpayers.  Those decisions are easier and more politically popular than paying for them.

Beyond income taxes, the government levies a payroll tax, and almost everybody who works pays it.  These taxes supposedly pay for guaranteed programs like Social Security. They don’t.  An individual’s payroll tax usually doesn’t cover more than a fraction of the benefits the worker will receive in retirement.  Today’s workers pay for retirees.

Because the federal government runs up a budget deficit almost every year and payroll taxes don’t cover benefit commitments, it looks like taxes are too low.

Biden proposes to raise taxes on the most wealthy households and on corporations.  If he gets his way, the new tax rates will still be lower than under President Obama.  In other words, much of the Trump tax cuts will survive.

But corporations and some wealthy individuals complain that if they pay more taxes, they will invest less in the economy, creating fewer jobs.  It may seem logical that raising taxes could have a negative effect on the economy, but there’s no proof.  In fact, much government spending finds its way into the private sector, stimulating the economy.

There’s one way to increase tax revenues without a tax increase. Give the IRS the funds for enforcement.  The IRS commissioner just reported that the government could be losing as much as $1 trillion a year to cheaters. Cutting big government has meant slashing the IRS budget.  Biden wants a 10 percent increase.

If we want better roads and more warships but dislike taxes, how do we pay for them?  The federal government borrows and debt increases.  Don’t worry about that, say succeeding presidents.

The economy will keep growing, especially without heavy taxes, and that will produce more tax revenues that can be used in the future to pay off the debt.  The annual projection about future tax revenue is one of the greatest exercises in artificial optimism.  Great days are always coming.

To that hope we have joined the belief that interest rates are now so low that future payments won’t be burdensome.  Add low interest rates to a booming economy and more debt is no problem. 

That theory leads to tax cuts. If lower taxes help the economy, we should cut them even more. That worked once, under President Kennedy, and became an almost sacred belief.  It never again worked.  The national debt keeps growing, partly because increased revenue is spent, not used to pay off debt.

Add to that the fact that states cannot increase their debt without paying for it.  So they lean on Washington for funds, because the federal government has no such rule.  They transfer much of the high tax responsibility to Washington and, hopefully, taxpayers elsewhere.

There will always be new demands on government, so for the sake of future generations debt should be kept under some control. Otherwise, making debt service payments will inevitably require high taxes and crimp the budget. That would harm the economy.

The Washington debate focuses on limiting taxes as the way to choke the growth of big government.  It ought to focus on just what we want from government and then decide if and how we pay for it.