Common Sense or Ideology?
Our world is growing more complicated, with our cell phones, gadgets, lap-tops and GPS systems. Corporate culture is a powerful example, its “movers” often immobilized by unnecessary meetings, presentations, lunches, committees and conference calls. Often we make things more complicated that they need to be – text messaging, for example, is on most devices a highly inefficient way of communicating. Yet it remains wildly popular.
Wall Street is a powerful example of how an overly complicated world can obscure common sense thinking. Caught up in a mind-boggling thicket of abstruse mathematical formulas, computer models and technical analysis, investment bankers and their cohorts were living in an alternative reality in recent years. The problem is there’s no mathematical formula that can make a silk purse out of sow’s arse.
Take for example the Jupiter High-Grade CDO V, a fashionable mortgage bond during the boom. Jupiter was a bottom-feeder bond made up of the riskiest portions of other mortgage bonds — by definition, one of the most hazardous investments on the planet. Yet after plugging the numbers into a few formulas, running a few power-points, and conveniently assuming a forever rising real estate market (despite all historical evidence to the contrary), Jupiter was deemed a terrific investment. In fact, when it was issued in March 2007, 93 percent of the Jupiter deal was rated AAA! That’s not common sense.
In the realm of politics, ideology is often the complicating factor that leads us away from common sense. When the framing of issues is ideological, the divisions tend to run deep and are usually irreconcilable — big government versus limited government, free-market versus Keynesian economics, pro-life versus pro-choice. The clash of discordant ideology in connection with law and policy making tends to be a recipe for gridlock, griping and, too often, an irrational hodgepodge of inconsistent ideas and interests cobbled together in an incomprehensible fashion in legislation with diluted effect. And that’s on a good day.
Postpartisanship gets back to basics by seeking to rescue common sense and pragmatism from the choke-hold of ideology and party-affiliation. NYC Mayor Michael Bloomberg calls it “good, old fashioned honesty and common sense.” Other commentators have called it “kitchen table wisdom.” It’s the kind of wisdom that says government’s job should be to provide for the common good, not just the good of a few. Seems obvious. But did you know that 2/3 of all U.S. corporations (including foreign-based companies doing business here) pay zero income tax? Or that super-wealthy Americans in many instances pay a lower effective tax rate than their secretaries do?
It’s the kind of wisdom that says government should invest in providing a quality education to all Americans beginning in early childhood, even if it means marginally raising taxes for an elite few, because education defines who we are and will enable us to lead again in the 21st century on technology, energy, diversity, diplomacy and the environment.
Or take health care. With national health expenditures at $2.3 trillion in 2007 ($7,600 per person), increasing at a rate 2 times the rate of inflation, the United States spends 16% of the GDP on health care, compared to 9.7 percent in Canada and 9.5 percent in France. Yet both France and Canada provide insurance to all their citizens, while almost 50 million Americans are uninsured. One American goes bankrupt every 30 second because of their health care costs. Meanwhile, insurance companies boast massive profit margins, as does Big Pharma and so many others in the chain, while fraud and inefficiencies metastasize throughout the system.
Neither ideology nor party-platform dictates that health care is in need of deep reform. Common sense does. We have to try something new and bold, and it cannot entail merely freeing up competition or otherwise expecting that private actors will fix the system. Those aren’t big ideas and they haven’t worked. Common sense means clearing the air of ideological noise and taking immediate action in pursuit of the long-term goal of ensuring that every American has quality and affordable health care. It means making sure every American has access to the same health coverage politicians get and that those who need care the most are not discriminated against. It means investing in preventative care and implementing policies that incentivize Americans to lead more healthy lifestyles.
Common sense requires contextualization. That means being able to change one’s mind based on changed circumstances or newly-acquired evidence. For too long, politicians have placed undue importance on the myths of “standing your ground” and “sticking to your guns” come hell or high water. This tendency can lead us away from common sense. Embattled ex-governor of Illinois Rod Blagojevich, for example, recently took this to new levels of absurdity in denying the undeniable in connection with the corruption and bribery charges against him. Or perhaps you’re thinking of Lehman Brothers CEO Dick Fuld who throughout 2008, as Lehman teetered on the brink, continued vehemently to maintain that the company was doing fine and would weather the storm with room to spare. Most experts agree that if Fuld et al. had taken their lumps early, Lehman may have survived. But Fuld opted to stick to his guns rather than face reality.
Consider the recent Congressional debate over the American Recovery and Reinvestment Act, in which Republicans soldiered on with the position that the bill should include tax cuts for large corporations and the wealthy. Their theory, first championed by Ronald Reagan, is that subsidizing an elite few at the top will result in more business activity and thus wealth “trickling down” on the rest of us. Here’s the problem — it didn’t happen. Trickle-down theory has dominated policy making for almost 30 years but hasn’t worked.
From 1980 (the year Ronald Reagan was elected) to 2005, the national economy, adjusted for inflation, more than doubled, but the average income for the vast majority of Americans actually declined during those years, while corporate profits and income for the wealthy increased exponentially. In other words, nothing trickled down. Instead, these policies have produced an unstable, top-heavy economy and, as the current economic crisis demonstrates, significant illusory “growth” that was neither sustainable nor equitable. But even putting these things aside, giving the economy a jolt — the whole point of the stimulus package — requires spending and, in a sagging economy, we cannot reasonably depend on American businesses to do that, no matter how many tax cuts you give them.
Does this mean we should never again give tax breaks to corporate America or to the wealthy among us? No. But in the current historical context, as the country suffers hundreds of thousands of job losses a week, additional supply-side tax policies do not comport with common sense. We need to put Americans back to work, quickly, and cutting taxes for corporations will do little to ensure this happens. Still the GOP continues to stand its ground on trickle-down. On the other hand, Americans are seeing right through it – a full 63 percent of respondents in a recent poll believe Republicans opposed the stimulus for political reasons only, not policy ones.
In contrast, take Larry Summers, President Obama’s chief economic advisor. While serving in the Treasury under Bill Clinton, Summers advocated for the selfsame deregulatory measures that many believe caused the financial crisis. Progressives trounce on him for this. But Summers is unafraid to change his mind when the circumstances warrant it. Summers now admits that “there’s no question that with hindsight, stronger regulation would have been appropriate” before the financial crash. In his last column for the Financial Times before joining the Obama administration, Summers said the pendulum “should now swing towards an enhanced role for government in saving the market system from its excesses and inadequacies.” Another example of a common sense change of mind is President Obama’s recent frank admission that he “screwed up” in connection with his misplaced nomination of Tom Daschle as health czar.
The enemy of common sense is knee-jerk reliance on worn-out ideological jargon. Unfortunately, it is an enemy that must be confronted often in the corridors of power. For example, many have tried to shoehorn President Obama’s initiatives into existing ideological frames, characterizing these programs as a return to the same old liberal “tax and spend” policies and “big government.” And, of course, raising the specter of “socialism” is a common ploy.
Labeling domestic spending policies “socialism” is not a new tactic in the ideology wars. “The right would use ‘socialist’ against Franklin Roosevelt all the time in the 1930s,” says Charles Geisst, a financial historian at Manhattan College in the Bronx. “To hear him referred to as Comrade Roosevelt during that period was not unusual.” The term used to carry a potent stigma in light of its connection with Soviet-style communism. The truth is that since the end of the Cold War and with so few communist regimes remaining, the stigma has weakened substantially, especially for those generations growing up since the end of the Cold War.
Seeing this, ideologues have back-peddled a bit, with many now referring to Obama’s policies as “European-style socialism.” This, however, is shakier ground for them as the center of political gravity moves left and in light of the relative success of the models in Sweden, Norway, and Finland, especially in the areas of health care, education, and tax reform.
At bottom, the socialism attack is based on an ideological dichotomy between socialism and capitalism that is false. In fact, socialism and capitalism exist on a continuum, and part of the success of this country has been our ability to move nimbly back and forth on the continuum as dictated by circumstance and good judgment.
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From The Five Principles of Postpartisanship, By Aaron Knapp, Copyright 2009 by Aaron Knapp.
