Why & How the US Government Has Failed Us: Excerpts from a Sun Interview with Economist Dietrich Vollrath + New GA Polls!

We extend our discussion of economic & political policy from a different vantage point. Vollrath focuses on the structural mechanisms of government being too aligned to serving corporations, not people, as the problem to our response to Covid.

Still Have Georgia On My Mind: Two Days!!!

New polling data shows Warnock and Ossoff sustaining leads with both now drawing over 50% of the preferences of those polled. While this is encouraging, we are still within the margin of polling error and so with just two days to go, our sustained efforts are critical. We provide links directly under the new poll results. Personally, I am hoping JMC Analytics (third poll below) has it right 😉

As another indicator of the value of the grassroots efforts you can support with donations or your time, is that, as reported in today’s NY Times, one year ago 22% of Georgia’s eligible voters were not registered. Today, that figure stands at 2%. That is one helluva lot of new voters. I am guessing that, inspired by the November results, many more Georgians registered in the last two months, contributing mightily to the reported 100,000 new voters who have early voted but had not voted at all in November. Let’s Do This!!! Two days to go!!!

Phone bank for both Ossoff & Warnock:

Speak Spanish?

Text bank for the Georgia Runoff:

Multiple phone banks, some focusing on absentee ballot chasing (verifying /reminding to return ASAP with voters who requested) w reclaim our vote,

Why Our Relief Efforts
Are Failing Americans

Roxanne subscribed to The Sun for some time. It is an intriguing magazine with a blend of art, poetry, spiritual exploration and politics. One of our supporters, Brian O’Keefe, directed me to this interview, as he felt it was an interesting extension to our discussion of democratic socialism this past week. Dietrich Vollrath is an economist from the University Houston and, at least in this interview his interest is focused on how and why the US government is structurally incapable of doing the right thing for individuals because our laws and governmental structures are constructed to address the needs of big business.

While he clearly has an interest in social justice, in a curious way, his focus is more on the efficacy of offering more focused, sustained support to individuals than corporations rather than the justice involved. So today, we will knit together a series of excerpts from a most interesting interview. We only focus on a portion of Vollrath’s interview. So if you want to examine his view on capitalism, regulation, and various forms of capitalism, you may want to examine the full interview.

Vollrath’s first point is related to the failed national effort to support workers and individuals during Covid and how delivering money directly to cities, states and individuals is the most effective means of sustaining our economy and our local communities:

“But the federal government can step in and help out by absorbing a bunch of debt and paying it off later. It can give money to state and local governments so they can, for example, pay firefighters and not have to fire people. Even if you believe in laissez-faire governance, in this critical situation we need a central coordinating body to deal with the pandemic and prime the economy. The government needs to start spending so that everybody can start spending.”

From The Sun: Even Money”, An Interview with Dietrich Vollrath

Vollrath’s point is that to support and enrich corporations during the pandemic misses the point, as for business to thrive, people must spend money on goods and during the pandemic, people are holding on to what they have, if they have anything to hold.

One major flaw in the federal government’s response to this pandemic has been its failure or inability to assist people directly. The ultimate goal is to assist households and families and individuals, but that seems really hard for our government to do. Sending checks to people is technologically difficult, and state unemployment-insurance systems are struggling to meet demand. It’s easy for the government to give a loan to a large company that has an established relationship with a bank, but it’s hard for it to give a loan to a local restaurant. So the federal government deals with big entities and hopes that the relief rolls down and reaches the people who need help.”

From The Sun: Even Money”, An Interview with Dietrich Vollrath

He goes on to contrast the US inability to support Americans in need, with the response in Denmark and Switzerland.

Denmark and Switzerland instituted stimulus programs of a similar scale, but they were more efficient. In Switzerland if a restaurant applied for a loan, it got the money two days later. And in Denmark the wage supplement gave companies the money for their employees’ wages within forty-eight hours. The aid went right to the people who needed it without having to go through this torturous process.”

From The Sun: Even Money”, An Interview with Dietrich Vollrath

Interestingly, Vollrath notes that in Scandinavia, government knows EVERYTHING about its citizens, income, income source, etc. So it is also easier for these nations to be nimble and strategic and deliver support with more precision than we have in the US, where a person on the verge of homelessness and without income, get $600 just as both Roxanne and I do. In this regard, again Vollrath’s focus is on the differences in the practical, structural capacities of the US and Scandinavia.

While Vollrath focuses on the logistical challenge of distributing money to individuals, Retake frequently points to the legacy of the Reagan era and the myth of individualism as the root of our failure simply to do what works, distribute money to those who need it. Vollrath points out how Social Security is perhaps the most popular governmental program of all and it manages to direct financial payments to seniors quite well. He will return to this theme later when pointing out that what we are able to do, is a matter of choices our leaders make about how to manage resources and guide (or misguide) the nation.

We’re really good at sending money to seniors. Social Security is hyperefficient: funds come in to the federal government from everyone’s paycheck, and my grandma gets money every month. It’s straightforward. What we’ve seen in the early months of the pandemic is that we have no clue about how to do that for everybody else. It should be simple: Congress wants to send $500 billion in cash aid to families and individuals. The Treasury Department issues $500 billion in bonds to the market, and a day later they transfer the money into everybody’s bank accounts.”

From The Sun: Even Money”, An Interview with Dietrich Vollrath

But since we are reluctant to just distribute money we instead follow the path of trickle down, provide support to corporations and hope that those benefits wind up supporting employees. But to ensure this happens, (or to pretend to ensure this happens), the Congress constructs elaborate bills with reams of regulations and rules and, this both slows things down but also creates 5000 page bills that must be passed with only one or two hours for legislators to review the bill. Vollrath uses plumbing as a metaphor for legislative and governmental processes. And this is the result.

If the unemployment plumbing were efficient, the government wouldn’t need a loan program where small- and medium-sized companies could borrow money to support their employees’ wages. To do that, Congress had to make rules. For example, if you take out one of these loans, you can’t use the money to pay stockholders dividends or buy back shares or raise executive pay. Now we’ve got sixty-two pages of rules, and the Los Angeles Lakers still got a loan! 

From The Sun: Even Money”, An Interview with Dietrich Vollrath

Given that trickle down has proven not to work over several decades, Vollrath is starting to gravitate toward the use of Universal Basic Income, not just to support low-income workers but to stimulate the economy more efficiently.

I’m starting to wonder if the answer to making the economy more equitable isn’t something like a universal basic income (UBI) — or, at least, in situations like this, we’d want the ability to make timely direct payments. There are a lot of studies of which interventions improve health and welfare and education in poor countries. Much of the research says the most effective strategy is to give money to individuals.”

From The Sun: Even Money”, An Interview with Dietrich Vollrath

Vollrath notes that “much of the research says the most effective strategy is to give money to individuals.” This is certainly illustrated by the proven efficacy of the Working Families Tax Credit, where families receive tax credits if their income meets the low-income threshold. Research here shows that after 2-3 years of the subsidy, most families no longer qualify as they have used the extra income to build their skills or experience sufficiently to increase their income to the point they no longer qualify. But that is but one instance. If anyone out there is interested in doing a bit of research on this, it would be welcome here.

At this point in the interview, Vollrath shifts gears. His focus on providing direct support to individuals was framed around creating more equitable and sustainable communities, but when examining sustainability, the conversation shifted to how to be sustainable and to grow an economy without increased consumption of resources and ultimately generating increasing levels of pollution.

Once again, Vollrath begins his thinking with a focus on efficiency.

The argument I have with the degrowth movement is that they take for granted the fact that oil use — or any kind of resource consumption — correlates with GDP growth: GDP goes up; we use more resources. But there’s no physical law there. There’s nothing about increasing GDP that necessitates using more energy. In the past the two were highly related, in part because we weren’t very good at producing goods. Factories a hundred years ago were inefficient. And so, as the economy grew, we used more and more resources, which made prices go up, because these resources are expensive. Over the past fifty years, however, our per capita resource use has tailed off. It’s been flat for the last fifteen to twenty years.”

From The Sun: Even Money”, An Interview with Dietrich Vollrath

He then shifts a bit to project how if we increased our focus on renewable infrastructure and research into application of renewable technology to production of goods and services, GDP could continue to grow without an increase in resource consumption.

Let’s say we do a perfect substitution, and our energy needs are now met by solar as opposed to oil: We’re still inventing new products. Our economy is still growing. And we’re actively reducing the amount of oil we use. That’s completely within the realm of possibility.

From The Sun: Even Money”, An Interview with Dietrich Vollrath

While that may make sense, oil isn’t the only contributor to the climate crisis and the use of gas and oil for energy is not its only use, as the industry, seeing the writing on the wall, is quickly shifting oil production to generate more and more plastics, which will create an entirely different set of climate and environmental challenges. While I found much of this interview provocative, I did feel throughout the interview, a general failure to fully appreciate the degree to which our thirst for growth is a major contributor to our climate crisis, irrespective of gas and oil consumption. But while Vollrath may have had a blind spot here, he did see another flaw in the use of GDP and economic growth as a measure of economic and societal health and here his focus is on justice.

The problem with using GDP as an economic indicator is that there’s nothing about making the pie bigger that ensures that your piece is going to get bigger. For a couple of decades the pie has gotten bigger, but the size of a lot of people’s piece has stayed the same. We should maybe worry less about how fast the pie is growing and more about how big the pieces are for most of us, which has a lot to do with wages and policies about housing and health care and environmental issues.

From The Sun: Even Money”, An Interview with Dietrich Vollrath

One of the things I liked about this interview, was the degree to which Vollrath almost oversimplifies economic and political decisions: we should give money to people directly; loans to small business could take two days to process; shift to renewables and we can still enjoy economic growth. Some of it seems to work, other aspects seem indeed, to be oversimplified. But in simplifying things, Vollrath also more easily clarifies how our social, economic and environmental problems are the result of choices we, as a society or government, make.

Low wages, poor housing, bad environmental conditions, and poor nutrition all feed on one another. It’s stunning the effect that lead poisoning and air pollution have on people’s mental and physical health. If you live in a high-pollution area and breathe crappy air, you’ll be more likely to do poorly in school, which leads to lack of economic opportunity, which leads to an inability to leave your polluted community for a cleaner one. And that’s a result of choices that we make. Those problems are fixable. And they’re fixable whether GDP grows really fast or really slow.

From The Sun: Even Money”, An Interview with Dietrich Vollrath

And so, rather than addressing poverty by sending money directly to people who need money, we send money to corporations in hopes it will trickle down. Part of this decision we make is born from our over emphasis of what we take to be the measures of our economic and societal health. Vollrath notes that one of the reasons the government focuses on shaping policy to benefit the corporate sector is our overly focusing on the stock, bond and derivatives market and he uses an interesting metaphor to illustrate how such a singular focus leads to misunderstanding the health of our economy.

The habit of looking just at the financial markets — the stock market, the bond market, the derivatives market, and so on — is not unique to any single part of the ideological spectrum. Anybody involved in the federal government has tended to look at markets more than is probably appropriate. Here’s the problem with that: Say there’s a thermometer in my house that tells me what the temperature is. If I feel cold, the solution is not to put my lighter next to the thermometer and say, “Hey, look, the thermometer went up. Now it’s eighty in here.” The solution is to turn up the furnace. Too many people view the thermometer — the Dow Jones Industrial Average or the S&P 500 or whatever — as some reliable indicator of the economy, and it’s just not. It’s one piece of information.” 

From The Sun: Even Money”, An Interview with Dietrich Vollrath

Again, Vollrath uses a perhaps oversimplified analogy, but nonetheless the larger point is well taken. You get what you measure and so if you measure social health by examining the Dow Jones and GDP, you put your resources into corporate America to ensure continued growth and profit. But Vollrath goes on to point to how much this focus misses.

the Dow Jones Industrial Average is just one of the many millions of markets in the U.S., and it gets way more attention than it should. We act as if it indicates how the rest of those smaller markets throughout our society are doing, but it doesn’t. The Dow Jones doesn’t tell us about, say, the labor market for high-school-educated workers. If we had a separate index of labor conditions for those workers, one that changed minute by minute, then maybe we would be more conscious of what was going on for them. 

From The Sun: Even Money”, An Interview with Dietrich Vollrath

This has long been a foible of mine, the inordinate emphasis on the Dow Jones and GDP. Hell, after a brief, albeit huge dip in the stock market, despite continued high unemployment and suffering, the Dow has now reached an all time high. Profits among large corporations have soared while the small business community has been devastated. And, as Vollrath points out, none of this is captured in the Dow.

Cops are beating the crap out of people, the unemployment rate is the highest it’s been since the Great Depression, and there’s a ton of underemployment and possibly permanent layoffs. So who cares that the Dow Jones is back up?”

From The Sun: Even Money”, An Interview with Dietrich Vollrath

That’s it for today. If you want to read more of the interview, you can find it here. From The Sun: Even Money”, An Interview with Dietrich Vollrath

Categories: Economic justice

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7 replies

  1. Paul: Back in 2004 when I was CEO of a local credit union we were paying our folks $13 – $15 an hour in Portland, OR. It appalls me that most people aren’t even making that almost 17 YEARS later. What the heck is going on??!! We both know that the rich have just gotten richer on the backs of the workers. No wonder that there is such upheaval in our country.

  2. Try out this interview as well (also from The Sun) https://www.thesunmagazine.org/issues/539/dark-corners
    if you’d like to learn more about how and why we are where we are.
    Thank you Paul and Roxanne.

    • Yes, this is a great interview. Some of us are forced into the social media mess because our work and passions require we do so to pick out important ideas, news, events, etc. But this interview really pegs the mess that we have gotten into because of the many of us who have no critical thinking skills and easily glom onto fake or inciteful (in the bad way) content. They are the MAGAs, Proud Boys, believers in QAnon. Beware them, They are unbaalnced.

  3. Was on the Zoom with the UU Las Cruces. Gracias for all you do. My concern is that there is nothing about education and I believe that is the most important issue that we face. The system now ignores the Latino and Native people in all phases of its curriculum. Until that is corrected we will not move into a moreproductive economy, etc.

  4. Hi dynamic duo and fellow planetary citizens.

    103 years ago, in 1918, Eugene V. Debs, Labor and Socialist candidate for the ‘murkan presidency, said the following during a campaign speech:

    “I am opposing a social order in which it is possible for one man who does absolutely nothing that is usefull to amass a fortune of hundreds of millions of dollars while millions of men and women who work all their lives secure barely enough for a wretched existence.”

    400 INDIVIDUALS IN ‘MURKA HAVE A TOTAL NET WORTH OF $3.2 TRILLION. $3,200,000,000,000. 0.00000012 percent of the ‘murkan population.

    Around 100 million households in ‘murka have an annual income of $25-50 thousand, in many cases to support a family of 3-5 persons. Their net worth might be 0 – 10 percent of that yearly income.

    That is potentially ALL the persons in ‘murka, minus the top ten percent (32,500,000), leaving 302,500,000 citizens with virtually NOTHING.

    I abhor capitalism, which is nothing more than an artificial organism (a god) that turns humans and all other living things, and all physical matter, into objects to be – collected/owned/turned into garbage – by those who; 1 – create an unchallenged value for everything, and 2 – have an artificial source of power to enslave (own) each and every object on planet Earth.

    This dialogue from Sun is obviously accurate in the ‘effects’ of capitalism.

    But just putting new lipstick on this pig, which happens each and every time a new tidbit of propaganda is vomited all over ‘murka via any number of media mechanisms, just redefines and obviates the same parasitic behavior that has created at least 2500 years of tragedy, bitterness, depression, vengeance, addiction, slaughter, terror, massive instability, all leading to planetary suicide, homicide and genocide.

    Most humans are the victims (via ignorance or Stockholm Syndrome) of the incessant madness of capitalism, perpetrated by the ilk of the same male racists, sadists, sociopaths and misogynists that began this terminal behavior several millennia ago.

    We all are forcibly conditioned via propaganda to believe in HOPE, which is an assumption/expectation that ‘things’ will get better IF ONLY we ‘believe’ that they will turn around and we will drop softly into the gentle bosom of Nirvana.

    Eugene Debs was IMPRISONED for stating this realistic condition the SAME YEAR Spanish flue wiped out tens of millions of humans worldwide.

    Personally, I am sadly and tragically convinced that this species we all reside within, homo sapiens sapiens, created Humpty Dumpty in 1797 as a foregone conclusion to accept the terminal results of murder, rape and debauchery.

    In Greek mythology, which is allegory, Dionysus was the god of megalomaniacal behaviors. In Greek, Dionysus has a translation into Latin that is spelled ‘liber,’ which is translated into English as ‘free man.’ THE liberal individualism of Ronald Ray Gun, which rhymes with Donald, the bastard ilk of Dionysus.

    Against virtually all odds, we now have one last chance to exorcize and surgically remove the cancer of madness inside us, a fearful and loath some task that appears suicidal, or at least crippling. But we are, right now, crippled, toxic and our near-death cancer is stinking up the place.

    If we cannot do this, WE will be responsible, because we are here, now, for the almost certain extinction of 750 million years of evolved life and biodiversity.

    What to do, and how to do it? ‘A horse, a horse! My kingdom for a horse.’

    An octopus, one of Earth’s oldest and most intelligent living beings, would fight to its death for far less.

    Mick Nickel

  5. Since 2008, the Federal Reserve has stepped in and sent $50 TRILLION dollars to the banks. The banks then turned around and invested a great deal of this money in China. Which causes American jobs to go there, which shouldn’t help the economy. My college economics classes taught me that this level of money would cause “Hyper-Inflation” and would eventually tank the stock market back to 5,000 the rebound point. The thing is it has not. In fact, the Stock Market past 30,000.

    Yet, McConnell is telling us the federal government cannot afford $2,000 a person or to pay people to stay home from Covid-19. That it would cause inflation.


  1. An Inspiring Dive Into Worker Owned Cooperatives & What Could be Possible in NM & the US. Plus More Polls on GA & Info Tomorrow’s Electoral Vote – Retake Our Democracy

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