The State, Brexit, and Jobs
In all the hysteria about Brexit, there seems to be a lack of a discussion of what is probably the ultimate driver of ‘Leaving’: the leaving of good jobs for about half of British voters. While there is a certain amount of racism and cultural xenophobia that is part of anti-immigration feelings, if everybody in the UK — or the United States — knew they could always have a good job, I think it is fair to say that anti-immigration votes would dry up into an irrelevant fringe. I will argue here that the Left could revive itself if it would propose a government-led plan to build a green infrastructure, rebuild manufacturing, and thereby guarantee a good job for anyone who wanted one — and provide an attractive alternative to the Right and to neoliberal ideology.
I took a look at the Labour Party’s official economic policy from the 2015, pre-Corbyn times and also at Corbyn’s attempts to formulate something different . I also looked at Hillary Clinton’s official plan to increase incomes. One can debate how effective any of these ideas would be, but that’s not my point here: the question is, is there a clear and effective plan in any of these proposals that the average voter can understand that can counter the simple anti-those-people ideas that are coming from the Right? The answer, I’m afraid, is no.
The 2015 Labour platform was completely anemic, and concentrated on bringing down the deficit, with nothing serious about generating jobs (in the US, the last time the Democratic Party made deficit reduction their top priority was when Walter Mondale lost to Ronald Reagan in a landslide). Corbyn seems to be trying to figure out a way out of the 2015 platform, although the only concrete proposal, taken from the 2015 program, is for rent control. Nice, but again, what about those right-wing hordes gathering at the gates, demanding jobs?
Hillary is actually a bit to the left of Labour, at least at the moment, at least rhetorically, but she doesn’t have much to say about creating jobs. Both Corbyn and Clinton make vague references about spending money, and creating jobs, by rebuilding the infrastructure. To bring Bernie Sanders into this discussion, he also talks about infrastructure — 100 billion dollars per year — and Clinton claimed that she was close to that number in one of their debates. As I argue below, this could be the start of something, but the candidates always throw infrastructure spending in the middle of speeches and in policy papers that get almost no attention.
Here is the main problem: the Right can imply or claim that their anti-immigration policies will create jobs because they will keep out or throw out a lot of people who have jobs now (in the US, undocumented Mexicans mostly, in the UK, mostly people from other EU countries). But because the government has ceased to be seen as a major source of employment, the Left can’t come up with a decent alternative. All they can do is make gestures about giving tax breaks to private firms for hiring people or other wonky alternatives. Because of the dominance of neoliberal ideas — that is, that the market should do as much as possible and the state as little as possible — even on the Left there is no alternative to somehow begging ‘the market’ to do the right thing and hoping private firms will hire more people. Which the private firms don’t do. At least the Right can use the government to do something which they claim will be effective — they can keep ‘them’ out of the country and throw ‘them’ out (or build a wall).
In the United States, there was a time from the 1930s through at the least the 1950s, when a government-led jobs program was seen as legitimate. The New Deal saw programs in which the government directly hired people, such as the Works Progress Administration, the Civil Works Administration or the Civilian Conservation Corps. There was also the Tennessee Valley Authority, which is still to this day a government-owned-and-operated energy system (and much else). FDR wanted to create many Authorities in the country, although that never happened. Of course, the biggest jobs program was the militarization effort of World War II, but even after 1945, a Republican Administration created what may have been history’s largest public works program, the Interstate Highway System. On top of all of this, the Federal government helped move most of the population into suburbs, dependent on government aid for creating infrastructure.
But now, neoliberal ideology teaches that ‘the market’ must be responsible for employment growth. All the government can do is ‘encourage’ the market, which turns into an excuse for eliminating regulations and decreasing taxes. But it is the ‘market’ which led to the lack of good jobs that half the population is revolting against. And they have revolted, to some extent, but by backing the far right wing economic ideas, attracted to the idea of fighting the ‘other’.
Do they have any choice? What is a worker who has lost his/her factory job, or never had a job because the factories closed long ago, to do? The best that the Democrats in the US or Labour in the UK have come up with is to increase the minimum wage. Crappy jobs, but the pay is better, if you can get them — not very inspiring.
I’m glad that Corbyn and Sanders are talking about inequality, but they need to recognize that without manufacturing inequality will only get worse. But how can manufacturing get better if the government can’t do anything about it? The sacred ‘market’ has decided that manufacturing should decline in the US and UK, so all intellectuals can do is shrug and mumble something about how ‘the jobs are never coming back’.
The EU makes the situation even harder, because even if a government wanted to reverse deindustrialization, there are now barriers to such action. The budget deficit can only be 60% of GDP, and if they are in the Eurozone, they can’t even print money, although very few governments are courageous enough to challenge this particular piece of conventional wisdom. The British control their currency, but the Left generally, as we see in the focus on the deficit, doesn’t entertain the idea of printing money either. In any case, the EU has decreed that renationalizing industries (such as trains in the UK) is not allowed. And then there are the constraints of the WTO, which make it next to impossible to encourage national industries by restricting government expenditures to domestic firms (domestic content).
To make matters worse, when a far right politician talks about encouraging manufacturing or attacking free trade, as in the case of Trump, some on the Left have the knee-jerk reaction of arguing that free trade is good and manufacturing ‘will never come back’, as if by making those arguments, Trump’s ideas would be less attractive to voters. In reality, it simply makes progressives less attractive to voters.
What Brexit has done is give the Left an opportunity to change the nature of the discussion. Instead of presenting angry voters with two choices — neoliberalism vs. anti-immigrant/racism — the Left could lead with government-directed job creation. The most basic function of the state is to build the infrastructure which allows for a particular territory to be economically and politically interconnected and to function properly. That most obviously includes transportation, but infrastructure also means the water infrastructure that provides the foundation for any large scale accumulation of human beings, as well as an energy infrastructure. In addition the state, one way or another, is responsible for how society is physically laid out — whether with sprawl, suburbs, and cars, or in dense, efficient cities, for example. The state has also taken on the function of the vast bulk of education, research and development, and health. The state — whether successfully or not — manages this system of systems, or what we can more easily call a ‘civilization’.
While the hand-wringing about the future of the EU and Britain is all good and well, none of it will matter much if Antartica melts (since much of the continent is below 300 feet above sea level). So it would seem to be a logical fit to solve two problems at the same time — guarantee everyone a good job, and thereby pull the rug from under both the neoliberals and the far right — and also, avoid the worst of climate change. There are many wind turbines, solar panels, electricity grids, dense urban neighborhoods, transit systems, and high-speed rail systems to be built, much less rebuilding the infrastructure that is currently in disrepair. And yes, we can even include free college and health care (in the US) as part of a program of rebuilding the infrastructure (for the details of one way to do this, you can see my plan at GreenNewDealPlan.com, which also has a link to an article on the topic, and you can also download chapters from my book at ManufacturingGreenProsperity.com).
The first reaction that a plan like this would elicit would undoubtably be that there is no way ‘we have the money’ for this sort of thing. Never mind that we had the money to wage war in Iraq or bail out the banks in 2008, we don’t have the money to create a booming economy and prevent civilization from collapsing under a rising ocean and scorching temperatures. Here again, the enfeeblement of the state takes its intellectual toll, because the state is uniquely positioned to create whatever money it needs, but under neoliberal policy, and reaching back hundreds of years, we have been told that only the banks can create money, since they are part of the sainted ‘market’.
However, as Adam Smith pointed out, the “wealth of nations” is not counted in gold or money, it is counted in the physical and human capital that exists within the confines of a nation. The money supply reflects this wealth, or should. When the government creates wealth, and particularly when it creates the means to generate wealth (as with infrastructure or factories), then logically the money supply should go up. Which means either the banks create money, then loan it out with interest, which eventually leads to bankers and the 1% controlling world, as Thomas Piketty and Michael Hudson have pointed out, or, much more rationally, the state creates money, that is, money is printed by the government’s treasury department (as Lincoln did during the Civil War after the banks tried to get a 30% interest rate to loan to the US).
Alas, instead of making this argument — which admittedly takes a certain amount of time and energy, and would upset the priesthood of economists that the mainstream media depend on — the Left tends to tie itself into knots explaining how it will ‘pay for’ whatever paltry programs it manages to propose. We will tax speculative financial transactions to pay for free college, or tax the rich a bit more to pay for new infrastructure. While these are fine ideas — and they should be used for policies of redistribution, such as increasing Social Security/retirement benefits — they won’t cover the needs of a massive job-creating green infrastructure building program. If the state was reinvigorated, it could easily create the money needed.
In fact, to take the concept of rebuilding the state one step further, if government controlled financial institutions and/or the energy and transportation networks it created during an infrastructure building program, it could use the revenue from banks, etc. to fund most of its activities, and cut taxes to the middle classes. And since everyone who could be employed would be employed, anyone who couldn’t work could receive a very comfortable income from the state, and we could eliminate poverty and all of its unpleasant side effects — including anti-immigrant politics and the attraction to the far right.
Whether Brexit — or the emergence of Donald Trump — can ultimately lead to a reorientation of the Left, I have no idea. But Brexit does do three things — it potentially gives the British state more freedom to maneuver, it potentially gives space within the Left for people to propose that the state can be the major actor in the economy and thus counter the Right, and it potentially will mean that more people will question the neoliberal option.