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Memory and Myth in Economic Policymaking

The real world is quite complicated. We make sense of it for the purposes of assessing policies by using the shorthand incorporated in accepted myths and memories. For instance, James W. Loewen explains how the many “facts” that can be brought to bear to explain the Civil War have been condensed into a myth that the Confederacy was about protecting states’ rights and intersectional differences over policies from an overpowering federal government. This myth, or the sense of memory that most Americans have in understanding the Civil War, of course masks the racism inherent in most right-wing extremism in the United States today. That “memory” of the Civil War lets people look past the racism of Donald Trump, to interpret him as heir to that stream of Americana of someone who bravely battles the meddling federal government in Washington.

But myth and memory also are key to economic thinking. Economics can be equally complex as history. Making sense of what role fiscal deficits play in the economy, or trade, or minimum wages are wrapped in simplifying stories—or myths. Unfortunately, just as with the concept of the Confederacy as noble, many Americans hold to economic myths that are harmful. Fiscal deficits are very necessary to run when the economy is stuck, as it is now, with inadequate aggregate demand to promote a healthy level of business investment and consumer demand to accelerate job growth. Yet, most Americans believe that when Washington, D.C., runs a deficit it is a job killer, and somehow not virtuous. Even President Barack Obama delivered such a speech in February 2010 about American households tightening their belts during the recession meant that Americans expected to see the government also tighten its belt, despite only one month of positive monthly job growth out of the past 24.

The biggest conceit of the neoliberal agenda has been to convince Americans that what is good for Wall Street is good for America. This “trickle-down” has led to policies that suppress wages, lower corporate taxes, and undermine public investment and the legitimacy of laws that regulate business behavior to protect workers and our environment. The revolt taking place in this year’s election is a testament to Abraham Lincoln’s famous observation about Americans: “You can fool all the people some of the time, and you can fool some of the people all the time, but you cannot fool all the people all the time.”

Donald Trump has manipulated the anti-intellectual bent the Republican Party took in assailing “liberal” elite institutions and on the back of the Confederate myth, attacked the Washington elite on behalf of the white yeoman while truly advocating the same oligarchy protection that was always the truth of the Confederacy—a government whose sole purpose was to protect the wealth of the wealthy planter class.

Hillary Clinton has embraced the progressive platform of the Democratic Party that rejects the neoliberal case as well. It calls for raising the minimum wage, restoring public investment in our infrastructure and in our human capital by doubling down on college affordability. It also calls on corporations and the rich to pay their fair share of taxes, noting that the tax cuts given them by former President George W. Bush did not result in rising incomes for anyone but the 1%.

But another myth is that America has been signing “free trade” agreements that enhance the competitiveness of America’s manufactured goods. The clear evidence is that since going down that policy path, the non-oil trade deficit of the United States has exploded; and the jobs of Americans in those fields has collapsed. Of course, these are not “free trade” deals. They are, in fact, a set of international corporate governance rules that make corporations more powerful than nations. By granting authority to corporations, these agreements force countries to engage in races to the bottom to see which countries can lower wages and environmental standards the most to boost profit and capital income share at the expense of wages.

Americans now reject those ideas. Those deals are an element of why the 1% gains and everyone else loses. President Obama recently has increased his efforts to push for those things that help right the economic ship of the nation, like raising the minimum wage. But he needs to go one step more to insure there is no confusion over where Hillary Clinton stands on the Trans-Pacific Partnership. He needs to state clearly that he is withdrawing the TPP from congressional consideration and will leave that to the next president to start a new round.

The rift in the nation today is similar to the rift in 1860. Two clashing views emerged of democracy because the crisis of the Dred Scott decision and the raid at Harpers Ferry made clear that the American myth of “all men are created equal, that they are endowed by their Creator with certain unalienable rights” could not withstand the hypocrisy of slavery. Similarly, today, the neoliberal policies that created economic stagnation and smothering inequality test the mettle of Americans and their sense of democracy. Is this a “government of the people, by the people and for the people” or a puppet for American corporations, existing only to insure an economy that profits the few and the rich?

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