The Debt Deal is "Bad for Everyone": Jim Livingston on the Latest Developments

tags: debt ceiling



David A. Walsh is editor for the History News Network.

Mr. Livingston teaches history at Rutgers. His forthcoming book is "Against Thrift: Why Consumer Culture is Good for the Economy, the Environment, and Your Soul" (Basic, 2011). He blogs at politicsandletters.com.

What’s your reaction to the latest news out of Washington, that a bipartisan deal has been hashed out by top congressional leaders and the White House?

The latest news is bad for everyone, because the deal being worked out is pretty much what the Republicans wanted, minus the balanced budget amendment that the radicals demanded late last week.  Another six months is not enough to calm the markets, and not enough to satisfy Obama's base, so he loses both ways.  Only by misreading this country as center-right could the president "triangulate" in such a pointless manner.  He can be re-elected, but not if he keeps tacking right.

You mentioned this in your latest article for HNN: one hears this cry again and again: households have to balance budgets, and the federal government must do the same. Where did this talking point come from?

The conflation of households and governments—families and states—derives from a pre-modern, dynastic version of politics or from a post-modern denial of the difference between public and private.  I think the latter is a promising vein of political theory, but it won't get you very far in understanding what government spending does, or where it comes from.  No family has taxing power, unless it wields an illegal ability to extort fees from small businesses.  No family has responsibility for public goods, unless it's an illegal entity that runs parallel, as it were, to the state, and if it does, its benefits are parochial at best.  No family's borrowing and spending pays off in the form of more efficient interstate transportation, lower transaction costs, better public education, and safer shores.  No family's investments lead to a more productive stock of human capital except by borrowing against the assets it has now and might claim in the future; but unlike government spending, the benefits are strictly local.

To balance the federal budget is to guarantee that its counter-cyclical capacities, which work at the macro-economic level, are disabled.

You’ve been an advocate of the benefits of a consumption-based society. Can a consumption-based economy ever been ecologically sustainable? Or, in an age of diminishing natural resources and dramatic climate upheaval due in no small part to industry and consumption, is this another god that is doomed to fail?

Consumer society is more ecologically sustainable than the alternative simply because consumers can't be interested in the accumulation of wealth in the abstract (unless they're hoarders, and pile unusable crap up in their garages).  As consumers, we want use values, not exchange values—that is, the monetary yield on our investment (“compound interest”).  We know that what we buy to use for ourselves or to give to another will depreciate, not grow, in value.  So as consumers, we can perceive and act upon the limits of economic growth in ways that investors can’t—they have to be looking to expand the sum of value in their custodial grasp, whereas we don’t.  As soon as we understand the limits of growth, we’re engaged in a conversation about sustainability. 

Has there not been a failing on the part of the various elites -- political, intellectual, and media -- in challenging status-quo views that are intellectually bankrupt, such as the aforementioned moral equivalence between household and government budgets?

These fissures between elites have been growing for forty years, when arguments about the meaning and significance of the 1960s became normal political discourse.  These fissures are for the most part exact reproductions of the differences in the electorate and the larger public over what historical moment we inhabit, whether the receding bourgeois epoch or the impending post-industrial society.

You wrote that "the alternative" to the moral universe of thrift, hard work, responsibility, and reward is one "where accountability is absent and all bets are off." You made the argument for that alternative morality in your article, but how does one go from an intellectual argument for what will undoubtedly be an unpopular moral compass, flying in the face as it does of mythic America, to concrete political and social action?

I’d reverse the assumption of your question.  The concrete political and social actions necessary to address, if not validate, the new moral universe that is under our feet have already begun.  Now they need intellectual fortification, but not just a literary defense of the welfare state.  We’ve grown accustomed to transfer payments, “entitlements,” etc., because we know that a transparent relation between effort and reward, work and income, whatever, is unattainable, and that there’s not enough work to go around, anyway.  One way or another, we’re all on the dole or about to be.  We believe in that good old criterion of need, but not enough to make it the regulative principle of income distribution.  We need to reexamine our beliefs.

Will we ever be able to solve the seemingly perpetual political and economic crises that seem to be an everyday occurance in modern America?

“Crisis becomes the norm.”  That’s John Dewey in 1920, describing the nature of modernity.  He insisted that crisis was also opportunity—that deviation from the norms supplied by the past allowed for more choices in the present.  Deviation wasn’t devolution.  Perhaps a better way to think about the nature of the current crisis is to inquire into political deadlocks in the American past.  Are we living through a moment comparable to the crisis of the 1850s, when incommensurability became normal and violence seemed a practical means of settling political differences?  If so, what are the sides, and what are the stakes?

Will Washington ever begin, in the words of Richard Sylla (who I interviewed earlier), to “act like adults” when it comes to the economy?

I think the world of Dick Sylla there is no return to fiscal responsibility in sight or in store.  For fiscal responsibility would mean that lawmakers and their constituents alike had debated and then agreed on what they were responsible for, and to.  In most of the debates I've read, "the future" or "our grandchildren" is the figure to which everyone refers when wanting to sound responsible, but when you tell me that you're cutting Medicare and Head Start and reducing "entitlements" in the name of a higher morality, I think you're behaving as irresponsibly as the so-called revolutionaries who kept saying you can't make an omelete without breaking some eggs.

Fiscal responsibility, in my view, would entail higher corporate taxes, increased levies on capital gains, a surcharge on every transaction involving CDOs, a "buy-in" provision as per Dodd-Frank on bundled securities, stringent consumer protection against predatory lending.  Oh, and increased taxes on incomes over $250,00 and limits on CEO compensation. 


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