In celebration of @liberalcurrents.com releasing The Reconstruction Papers https://www.liberalcurrents.com/the-reconstruction-papers/ I wanted to read through and share my reflections on one. I chose @maiamindel.bsky.social 's essay on "The Liberal Economy".
Writing this intro after reading the rest, I think it's really fantastic and you would do better to read it than my thoughts on it. Regardless:
The essay leads with the insufficiency of liberal econ status quo. I fully buy into this presentation of overall economic inadequacy fueling the reactionary turn.
She sites the specifically inadequate nature of popular technocratic fixes - healthcare, housing, Abundance... I have to say it kind of tracks with my aborted attempt to show that healthcare and urban construction liberalization could more than counterbalance the exploding rate of profitability. While the magnitude of profit and the inefficiencies of housing and construction are a similar size, the urban construction benefit is an overall economic increase, and a lot of the theoretical economic growth from denser cities would come from boosts to high profit sectors... in other words, a misleading vehicle for arguing against the importance of the increasing share of profits as compared to wages.
Basically I could not construct a completely compelling argument, without tackling the root of the problem of ownership of rents. Obviously part of that is simply higher taxation. But I explored the idea of an expanded Social Security -- Social Prosperity, which could greatly have rebalanced wealth ownership. By doubling the employer contribution to social security taxation and using it to purchase public stocks you would create a Social Prosperity fund: essentially a social wealth fund, but with a similar purpose to the social security trust fund which is simply to redistribute it.
By distributing to retirees according to the social security formula, the excess of profits and rents from passive returns could be returned to lower strata. Half of social security taxes is enough that in 2000 it would have purchased about 1.67% (.25T of 15T) of the market, or about 1.25% (.5T of 40T) in 2020. The typical retiree contributes for 40-45 working years, and so, a long run average might see up to half of all stocks owned and ultimately distributed by the fund. (Keeping this proportion very fuzzy as the added buying would likely have a lot of hard to predict secondary effects.)
Social security formula gives the bottom third about 1/6 of the total, the middle about 1/3 and the top third about 1/2 -- while this isn't leveling income, a maximum difference of 3x is a far cry from the current distribution, where the richest 10% own 9x the rest combined. Averaging this with the other half of the market that isn't owned by the prosperity fund, and you find even the poorest third of retirees would have earned at least 8% of the stock wealth. The share of the top third would have fallen from owning 99% to owning 74%, with the middle third claiming 18%.
To put that in perspective, 8% of the stock market is 6T dollars. There are 68M people collecting OASDI payments, so 1/3 of them (23M) would be receiving a portion of 261K invested in the market. The average retiree receives 20 years of social security, and assuming a bottom tier recipient, they would receive an additional 1000$/mo increase, approximately doubling the existing program. A median rather than bottom social security recipient would receive 4-5K total income per month, per retiree. While I'm sure many young workers would be dissatisfied with such a delayed reward, it would provide a a strong avenue for family financial support in purchasing a new home, child care, etc., and eventually increased inheritance. Furthermore, it would provide a bulwark against escalating profit shares.
Anyway, leaving my unfinished personal manifesto aside:
Maia Mindel shifts to discussing the idea of two types of law: imperium, the law of people, and dominium, the law of property. She states that debates like healthcare focus on dominium, who ends up owning or paying for what, but not imperium, what kind of society and what kind of relations between people are being forged. My own preoccupations are somewhat guilty of her critique, primarily concerned with pure dominium.
The essay then shifts into a discussion of information. The ways in which the market is all about the exchange of information: what you are willing to accept or part with for something on the market. While an individuals' area of expertise is small, nonetheless people uniquely know what they are about: what it takes to do their job, what they need and want to thrive. Market economics doesn't depend on hyper-rational omniscients, it functions on local and partial knowledge -- only when agregated, given time and opportunity does it assume grander importance.
In this light, the essay looks at the relation of the peoples, in the sense of voting and democracy. It finds the vote, and voice of the people, as indispensible, in the way the worker and consumer are indispensible in knowing their lived reality. It's vitally important that it is put forth via voting, as there is no other way to know for sure how people are really feeling about leadership. Ignoring it (example given is rule by experts favored by anti-democratic libertarians) courts oblivion: it would be akin to command economy, only vaguely and incompletely informed by a hopeless central committee: forever divorced from the private wants, skills and lives of the populace.
She goes on to give supporting evidence for these assertions. Low political trust and upheavel lead to poor economic performance. It leads to corruption and capture by the rich, and then to inefficient cronyism. She sites literature that it goes the other way as well: unfair outcomes lead to 0-sum mentalities, low trust, hatred of foreigners, misogyny and anti-democratic beliefs.
There is then a recounting of the gradual destruction of blue-collar workers internationally, the movement from manufacture to services and offshoring. She then described Karl Polanyi's The Great Transformation as focused on fascism: why it arose, how to stop it. (Now I really want to read or listen to this work that I've always known primarily as being a source of @jdcmedlock.bsky.social thought.)
A key insight is then given regarding the advance of nazism. In the most depression-stricken areas, the nazis thrived by addressing both the dominium and the imperium. They coupled social reactionary advancement within the party on a personal level, with the promise of a national economic production. She goes on to suggest that the current left can learn from this: there are modern loneliness epidemics waiting for the personal, and also to be coupled with FDR style employment promises. Welfare increases, increased taxation, and blue collar economic expansion, together with outrach and institution building.
Finally, solutions: #1 building boom: construction jobs, reduces price of living, reduces wealth inequality (by reducing real estate appreciation). #2 Reduce rent seeking and corruption (couple of footnotes here 70 and 71, interested to read what the specifics are, as the essay doesn't include). #3 support family and children via transfers.
Some challenges are discussed. Firstly the absent state capacity, the need for rebuilt institutions. Here she also mentions the CTC cuts as the start of the vibecession. I'm curious to look more at this, because it seemed to me that many would not stand up for the program despite how much I liked it... perhaps like many things in vibecession discourse, you can argue the significant material impact to those that lost it, drove a rotten sense of misery. In the end though I just don't know keeping CTC would have averted the vibecession.
There's a beautiful ending quote from Franklin Roosevelt about "if American democracy ceases to move forward as a living force, seeking day and night by peaceful means to better the lot of our citizens, fascism will grow in strength in our land".
Thoughts about the solutions: Not really too far afield from what I had considered. I really do think a huge building expansion could cure so many ills. The discussion in the essay regarding imperium, gives me a firm anchor point for the reasons I think YIMBYism or Abudance writ large can be so inspiring. It's easy for me to imagine a future America, where rural, suburban and densely urban areas are united, by a gigantic spree of low cost urban high rises. This involves moving from the current American dream of a spacious single family house in suburbia, to one in which a prosperous 21st century American family now owns both a suburban single family house and an undersized small apartment for visting the city or renting out. This requires only really the selling of a fantastic lifestyle: the ability to walk a few hundred feet, and be at a busy park, shop, to drink, or hop on a train to a show, to be a part of and enjoy all the vibrant diversity of the city.
The key to me, is that once this vision is normed, it solves so many problems: it gives a natural path for children come young adults to have some freedom when starting out, or for a divorced man or woman to split peacefully. Also this abundance, naturally leads to surfeit: that vacation closet in the city in better times can now be sold or long term rented if one loses a job. A neighborhood once trendy or desired could become pase, with the apartments then essentially becoming firesold off. It also provides an abundance of short term rental units, which as we saw during the COVID pandemic served as the primary immediate safety valves for housing the homeless in private rather than group conditions. I think this also leads to the end of many humiliating circumstances that the poor find themselves prey to: overoccupying units with unwanted roommates, sleeping in cars, or sleeping on couches. Even the smallest room with shared or external facilities can be a safe refuge and space for self-expression.
Regarding the welfare transfers, I do support the CTC and various other approaches including UBI. However, I do think that the Social Prosperity model I outlined earlier, is a particularly robust mechanism to rebalance ownership. It protects against varied profit vs wage futures, including AI dominated futures, in way that (even indexed) direct welfare programs can not directly. There is also a very natural inclination in society to reward workers, and this is a shield to mandatory contribution retirement programs with the structure of social security. These programs have an extremely strong valence of entitlement, in the way that benefits for having children or un- or under-employed just do not. If you can even partially fix wealth inequality in this fashion (as social security did,) it stays fixed, forever.
Some general closing thoughts: I feel pretty self conscious even writing this, as it all makes rough what was clearly put together by an expert that I have admired the writings of for some years now. I've been listening to an audiobook of The Unaccountability Machine https://press.uchicago.edu/ucp/books/book/chicago/U/bo252799883.html and I'd be interested to know what Maia thinks about the dynamics of information breakdown presented there, as the essay touches on very similar themes. The essay has 86 source citations and I'm thinking I'd like to work my way through it at least partly, probably starting with the Polanyi.