Economists agree with Bernie

The popularity of Bernie Sanders marks “the end of the politico-ideological cycle opened by the victory of Ronald Reagan at the 1980 elections,” according to world-famous French economist Thomas Piketty who authored the best-selling book, Capital in the 21st Century.

Piketty argues that Sanders isn’t mimicking Europe’s social democratic models but rather leading the nation toward a return to a period of very progressive taxation and social spending in America.

Piketty says that, before Reagan, 20th-century fiscal policy in the U.S. was more assertive in taxing the rich than the Europeans.
“In the interwar years, the country invented a highly progressive income and estate tax and set up levels of fiscal progressiveness never used on our side of the Atlantic,” Piketty wrote. “From 1930 to 1980 — for half a century —the rate for the highest U.S. income (over $1 million per year) was on average 82 percent, with peaks of 91 percent from the 1940s to 1960s (from Roosevelt to Kennedy), and still as high as 70 percent during Reagan’s election in 1980.”

Reagan changed all of that. He would lower the tax rate for the highest incomes to 28 percent. The establishment Democrats would accommodate themselves to this new reality. Bill Clinton was the leader of the corporate-funded Democratic Leadership Council (DLC) and distanced himself from the legacy of the New Deal. His big victories — NAFTA, financial de-regulation, welfare “reform,” mass incarceration — were defeats for the Democratic base of working people and minorities.

Now things have changed in the Democratic Party. The rank and file has been moving to the left for some time and an aggressive progressive populist faction of Democratic officeholders and candidates has asserted itself. Hillary has an awkward relationship with this development.

She proposes modest but inadequate progressive measures while Sanders proposes bold but perfectly reasonable change given the disastrous impact of the Great Recession and grotesque income inequality on the lives of ordinary people.

However, if a Democrat is elected president this fall and the Republicans retain control of both the House and Senate, none of Clinton’s or Sanders’ reforms will become law. Sanders argues that is why we need a “political revolution” of mobilized citizens and social movements working with progressive officeholders.

Political analyst Thomas Frank argues that the biggest problem of establishment Democrats like the Clintons is that they have been competing with the Republicans to become the party of Wall Street, the tech industry, big pharma and the telecoms.
Frank puts it bluntly:

“Consider the revolving door between Washington and Wall Street, which drew so much public outrage in the early days of the Obama administration … or the revolving door between Washington and Silicon Valley, which has been turning briskly in recent years without much public notice at all. Or the deal the pharmaceutical companies got as a result of the Obamacare negotiations. Or the startlingly different ways in which Obama’s Treasury Department treated beleaguered bankers and underwater homeowners. Or the amazing double standard his Justice Department seems to have erected for dishonest mortgage financiers and dishonest mortgage borrowers. Or the way office-holding Democrats of nearly every rank throw money at the people they call ‘innovators’ while telling working-class Americans that little can be done about their ruined lives.”

Today, the Bernie campaign is shaking things up. Hillary sounds more and more like Bernie each day.

The corporate media has always been focused on personalities but now it is a PR machine for Donald Trump’s antics. We hear little about the substantial debates between Bernie and Hillary. For example, 170 of the nation’s top economists released a letter endorsing Sanders’s plan to reform Wall Street. These include former Labor Secretary Robert Reich, University of Texas Professor James K. Galbraith and Dean Baker, co-director of the Center for Economic and Policy Research in Washington, D.C.
They state that Sanders is “correct that the biggest banks must be broken up and that a new 21st Century Glass-Steagall Act, separating investment from commercial banking, must be enacted.”

They go on to say that “Wall Street’s largest banks are now far bigger than they were before the crisis, and they still have every incentive to take excessive risks… Secretary Hillary Clinton’s more modest proposals do not go far enough. They call for a bit more oversight and a few new charges on shadow banking activity, but they leave intact the titanic financial conglomerates that practice most shadow banking. As a result, her plan does not adequately reduce the serious risks our financial system poses to the American economy and to individual Americans.

Given the size and political power of Wall Street, her proposals would only invite more dilution and finagle.”

Why isn’t the letter a big news story? Perhaps we can have a serious national debate over issues such as this if Bernie continues to run strong in the primaries and caucuses. It won’t be easy. Bernie is challenging the One Percent in not only the economic and political establishments but also the media establishment. This debate is essential for a democracy and we might also elect a great president. Go to your caucus on March 1 and vote for Bernie.

This opinion column does not necessarily reflect the views of Boulder Weekly.