The End of Loser Liberalism: Making Markets Progressive [Paperback]

Dean Baker (Author)

Book Description

Publication Date: September 19, 2011

Progressives need a fundamentally new approach to politics. They have been losing not just because conservatives have so much more money and power, but also because they have accepted the conservatives' framing of political debates. They have accepted a framing where conservatives want market outcomes whereas liberals want the government to intervene to bring about outcomes that they consider fair. This puts liberals in the position of seeming to want to tax the winners to help the losers. This "loser liberalism" is bad policy and horrible politics. Progressives would be better off fighting battles over the structure of markets so that they don't redistribute income upward. This book describes some of the key areas where progressives can focus their efforts in restructuring the market so that more income flows to the bulk of the working population rather than just a small elite.

Product Details

• Paperback: 170 pages
• Publisher: Center for Economic and Policy Research (September 19, 2011)
• Language: English
• ISBN-10: 0615533639
• ISBN-13: 978-0615533636
• Product Dimensions: 9 x 6 x 0.4 inches
• Shipping Weight: 8 ounces (View shipping rates and policies)
• Average Customer Review: 4.0 out of 5 stars  See all reviews (3 customer reviews)
• Amazon Best Sellers Rank: #504,649 in Books (See Top 100 in Books)

Customer Reviews

Most Helpful Customer Reviews

15 of 18 people found the following review helpful:

5.0 out of 5 stars Excellent, September 6, 2011

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mrgordon - See all my reviews

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This review is from: The End of Loser Liberalism: Making Markets Progressive (Kindle Edition)

Dean Baker, co-director at CEPR, publishes the blog "Beat the Press." In BTP, Mr. Baker susses out poor reporting and faulty conventional wisdom regarding economic issues. This book, to my mind, both continues that good work and expands the frame.

Mr. Baker provides an intellectual blueprint for progressives. He argues, convincingly, that conservatives have dominated the economic policy debate. Progressives, on the other hand, have largely capitulated due to their misunderstanding regarding and acceptance of right-wing frameworks. For every liberal who's wondered aloud "how come we keep losing when our ideas are better," Mr. Baker provides the answer.

The book is unabashedly partisan and, thus, not likely to successfully convert anyone. But that appears to be the point. To counter what he sees as an all-out attack on middle- and working-class groups, Mr. Baker provides the best kind of polemic: smart, tough and based on sound economic fundamentals.

Expect conservatives to angrily respond in knee-jerk fashion. But can they counter Mr. Baker's logic and empirical evidence? Unlikely.

Kudos.

4.0 out of 5 stars Some interesting ideas, some duds, February 13, 2012

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MikeBizzle - See all my reviews

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This review is from: The End of Loser Liberalism: Making Markets Progressive (Kindle Edition)

I enjoyed this book. I thought he could have done more to explain why "loser liberalism" is a loser. The idea that obsessing solely with the tax code is a bad idea is probably true, but I'm not sure if he convinced me of that with this book. My other issue is that he complains about some of the current parts of the progressive agenda as being losers but then he offers some ideas that I felt were sort of on the small side compared to how big our problems seem to be. The example I will use is his discussion of work sharing programs as a solution to unemployment problems. It just seemed depressing to me that that might be the best answer we have to sustained unemployment. Of course, he has many other ideas as well and on the whole he makes a good case. I just felt at some times that when you attack the current progressive project as a "loser" you better come with the big guns or you just seem to be re-arranging the deck chairs on the titanic. Definitely worth a read if you are interested in ideas about how to get outside of the current deadlocked debates.

18 of 32 people found the following review helpful:

3.0 out of 5 stars His much slimmer Taking Economics Seriously Say it All More Succinctly, September 19, 2011

By 

Herbert Gintis (Northampton, MA USA) - See all my reviews

This review is from: The End of Loser Liberalism: Making Markets Progressive (Kindle Edition)

Dean Baker is a professional economist who works at the Economic Policy Institute in Washington DC. Baker's theme is the increasingly unequal distribution of income in the USA, and his goal is to reverse the tide towards an increasing share for the American middle class family. While many of his policy alternatives are very creative and interesting (more on this later), his basic policy stance is quite traditionally American liberal. "Conventional economic policy militates against the interests of working people," he asserts (p. 2),, and he argues for a return to the Keynesian policies of the post World War II era: "In the three decades following World War II," he states (p. 27), "the economy had strong growth driven by wage-led-consumption." He forgets to note that in this period the USA had a virtual monopoly in world manufacturing while Europe reconstructed from the war, and market-oriented third world countries did not yet exist. I cannot imagine who would like to go back to the era when all automobiles were made in Detroit and the bloated automobile industry leaders, business and union alike, spent most of their time fighting over who would get the monopoly profits.

Let me give some examples of Baker's preferences. He is skeptical of free trade (we find on p. 1 that "major trade deals hurt manufacturing workers by putting them in direct competition with low-paid workers in developing world." Trade deals? Economists generally believe (and I quite agree) that opening international markets are not "trade deals" but their absence. Moreover, we can attribute much of the growth in the past fifty years, especially in poor countries, to competing in international export markets. Politically, I don't think it is a winning strategy to advocate an alternative policy in which manufacturing workers are supported by taxpayers and consumers through trade restrictions and high consumer prices.

Baker is opposed to the anti-inflation policy of the Federal Reserve Board, which he says "relies on high interest rates" (p. 1) and to a strong dollar, which "makes US goods uncompetitive in world markets." (p. 1) Prior to the Clinton era, Democrats were known for the penchant for flooding the market with money and increasing the public debt to create jobs. According to conventional economic wisdom, this is a totally discredited macroeconomic policy, leading to weakening the dollar as the world's reserve currency, and when inflation becomes expected, it leads to stagflation (joint high inflation, high unemployment). And of course, in the present era, to accuse the Fed of promoting high interest rates is patently absurd.

Dean paints the broad differences between liberals and conservatives as follows: "The vast majority of the right does not give a damn about free markets; it just wants to redistribute income upward... For the last three decades the right has been busily restricting the economy in ways that ensure that income flows upward." (p.2) In short, liberals want regulation that benefits the relatively less well-off, while conservatives want regulation that benefits the rich and the powerful.

Conservative political theorists are likely to counter that they espouse a meritocratic vision in which individuals get what they deserve, not what they can wheedle out of the system through political influence. Conservatives will add that the liberal welfare state produces a pathological culture of poverty by ensuring that some individuals can live off of the hard work and sacrifice of others, and the abolition of anti-meritocratic interference in markets will empower the less well off to better their position. The idea that conservatives just want to help the rich and the powerful is simply not plausible. Of course, the rich and powerful almost always want to help the rich and power (pace George Soros, Warren Buffett, Bill Gates and others), and they have many resources to help get their way. But this is not the heart of American conservatism, and certainly not the reason the win elections. Moreover, the support of liberals for labor aristocracies (especially teachers' unions, but state workers' unions in general), and their lamentable penchant for ignoring the poor and dispossessed, are hardly indications of "caring about the less-well-off in our country."

As I have tried to stress in recent years, the beauty of American liberalism lies in its past struggles for occupational health and safety regulations, food and drug regulation, Social Security, Medicare and Medicaid, racial, ethnic, and gender anti-discrimination laws, birth control and family planning, sex education, and a culture of tolerance for alternative life-styles and personal choices. These struggles have been extremely successful. There of course remains more to do, but time is on the side of the liberal vision.

The greatest failure of American liberalism is to have eliminated or marginalized poverty, except for the elderly. Perhaps this is because you can't win votes by caring about poor children, although this is not obviously so. At any rate, the culture of modern American liberalism is to focus not on social problems and their solution, but rather on the income distribution and how to move it in favor of the "middle class." I have long argued that this is a mistake, simply because few voters care about the distribution of income, but rather care about justice and social values. For instance, as I write there is great animosity towards bankers not because they are rich, but rather because they enriched themselves through actions that gravely hurt the country's economic health, and while ordinary Americans saw their livelihoods threatened and destroyed.

Dean Baker perfectly reflects contemporary American liberal culture. He is fixated on the task of redistributing from rich to middle class, but his means is very creative and unusual: by using the market as an egalitarian instrument. His strongest argument is that the regulation of the financial sector is geared towards subsidizing the large banks, especially through government deposit insurance and the implicit "too big to fail" safety net that allows the big banks to maintain a high risk exposure and consequent higher rate of return that is available to smaller banks. There is little doubt but that increasing competition in the finance sector would have a strongly beneficial effect on the economy, especially by reducing financial fragility (see the paper "The Dynamics of Pure Market Exchange" on my web site). There is also little doubt but that the oligarchial structure of the financial sector is maintained by its political clout, especially via campaign contributions.

There are two problems with Baker's strategy here. First, it is not clear that a streamlined financial sector would have any particular effect on the distribution of income. Second, it is unclear that many voters would be moved by a campaign centering on a reorienting of financial sector regulation, partially because voters care little about either technical issues in economic regulation or about the distribution of income. A campaign to jail the perpetrators of financial fraud might do much better at the polls, but this would be economically costly to carry out and is merely vindictive with no long-run favorable implications.

Baker's remaining recommendations are important in principle but a long way from being currently implementable in fact. For instance, Baker notes that fostering international competition might be used to curb health care costs. Medical procedures are a fraction of the USA cost in other countries, and the quality of the services provided is equally high. Why not encourage Americans to go abroad for expensive medical procedures, and make it easier for foreign professionals to gain accreditation for working in the US health sector? Any such suggestion would of course engender the immediate and sustained animosity of the rich and influential physicians' organizations, with Americans' traditional suspicion concerning the quality of foreign services leading them to listen closely to the counterarguments. The success of this proposal would depend on carrying out several careful studies of the international health care market weighing pros and cons. Hopefully Baker's arguments will encourage others to undertake such studies.

Baker's final suggestion is based on the observation that economic efficiency requires that price be equal to marginal cost, whereas in some very rich sectors of the economy, including recorded music, computer software and especially pharmaceuticals, marginal cost is close to zero, but firms charge very high monopoly prices because they have secure patent rights on the product. Of course, drug firms must make a significant profit per unit sale to make up for the high costs of discovery and testing of products, but once on the market, it would be most efficient if they were sold at their marginal cost. Drug that costs thousands of dollars could then sell for a few dollars. The problem is: how do we encourage the research if the resulting products cannot be counted on for a stream of high-level returns?

Baker's answer is not convincing. He notes that there is considerable rent-seeking with big pharma and other patent and copyright holders, but surely eliminating this (how do you do that, pray tell?) does not solve the problem. He then suggests that NIH and other governmental agencies do the innovating. This is not a very well thought-out policy. Governments are not subject to competition, and hence they do not innovate. Finally, he suggests that "government could construct a prize mechanism under which it buys up patents after the fact for a premium keyed to the patent's usefulness." The problem here is that the government has no incentive to buy up the most effective drugs, but rather has an... Read more ›