Must-Read: Francis Wilkinson: Trade Is the Scapegoat for Political Failure: “Democrats have no viable plans to bring back sustainable, high-paying, blue-collar jobs… https://www.bloomberg.com/view/articles/2017-05-03/trade-is-the-scapegoat-for-political-failure

…Neither, it seems, does anyone else. And wages in the service economy don’t remotely compare with the best wages of industrial glory days. (Neither do most of today’s manufacturing wages.) The notion that “lousy trade deals” are responsible for the erosion of working-class prosperity is a common denominator in the rhetoric of Trump and Bernie Sanders…. At a panel discussion last week at the City University of New York, a handful of prominent economists grappled with “Trade, Jobs and Inequality.” None echoed the views of Sanders or Trump.

“No, lousy trade deals are not a primary cause” of working-class despair, said panel member David Autor of MIT in a follow-up email to me. “It is the case that China’s accession to the WTO in 2001 was a big shock to U.S. manufacturing. This was not really a trade deal, however. This was China becoming a member of an existing trade agreement. And this was an inevitable long-term result of China’s spectacular development.”…

Bradford DeLong of the University of California at Berkeley, pointed out that technological evolution steadily drove down manufacturing’s share of U.S. labor for half a century before the China shock. The demonization of trade deals, DeLong wrote to me in an email, is off target. “NAFTA was supposed to kill the U.S. auto industry,” he wrote. “It didn’t — the auto industry loved it.”

It might not matter whether trade, automation, globalization or some combination is at fault. But it matters greatly that American politics has proved incapable of mitigating the damage, helping to open the path to power for Trump…. Ann Harrison, a former director of development policy at the World Bank who is now a professor at the University of Pennsylvania, said: “The idea behind globalization is the winners, the exporters, the consumers, are so much richer that it is easy and straightforward to redistribute some of the winnings to compensate the losers. That turned out not to be true.” That failure of redistribution is a failure of politics more than economics.

It’s in part a function of the consistent devotion of the Republican Party to lowering tax rates on the most successful while resisting virtually all efforts to help the economy’s losers. But the resistance is also rooted in powerful social attitudes…. “Our package for helping the losers, Trade Adjustment Assistance, helped only about half those that it should have helped,” Harrison said at the CUNY event. “But, much more important than that, Americans do not want handouts. What they really want are jobs.”

Good jobs bestow dignity as well as wages. Concepts such as a universal basic income are controversial in part because they promise to separate income from work…. [But] as DeLong said at CUNY, wealthy heirs don’t seem to suffer a loss of dignity when they cash their trust checks.

“Back in the 1920s ‘welfare’ was a good word,” DeLong said. “When Edward Filene in the 1920s talked about ‘welfare capitalism’—firms providing health, accident, and pension benefits to their workers—the ‘welfare’ was in there to make his readers think that the idea was a good thing. But because people want respect, over the past century the word ‘welfare’ has been poisoned.”…

Trump’s attacks on trade always implied that the old factories would materialize in their old haunts once the trade regime went away…. Abandoning nostalgia for the glory days is long overdue. Indulging it misleads voters and allows politicians to remain complacent. Trump’s extravagant promises changed U.S. politics. Perhaps his all-but-certain failure to redeem those promises will be a preface to a new and better deal for workers.

Should-Read: Ernest Gellner (1990): The Civil and the Sacred: “The bourgeois fantasy lay in its doctrine that work was the very essence of man… http://www.bradford-delong.com/2017/02/weekend-reading-from-ernest-gellner-1990-the-civil-and-the-sacred.html

…that productive institutions and processes were crucial… and that this domination of historic development by the productive process would in due course lead to total human fulfillment through free, spontaneous, unconstrained labor… no state to enforce order and no civil society to check the state…. [But] in a domination-prone world, economic rationality is not rational: those who work hard see themselves deprived of the fruits of their labor only by those in power. It could be brought about only by cunning and reason, as an unintended consequence of religious anguish. Those who sought wealth were not to be granted it: those who merely sought to escape despair had wealth bestowed upon them.

But Marxism credits this distinctively bourgeois trait to the human soul as such, not to some men under the impulsion of a special torment: work is, it claims, our genuine essence and our time fulfillment…. In consequence, of course, Marxists simply possess no language in which to express their central political problem: their theory precluded the very existence of the problem and eliminated any tools for handling it. As long as political circumstance constrained them to remain within Marxist language, they simply could not even discuss their main problem…

Must-Read: On this one, I agree 100% with Larry. A U.S. Treasury Secretary needs to make it clear that he (or, I hope, someday she) knows that his (or her) ultimate, long-run principals are the voters of the United States and the people of the world. There will come a point where the Treasury Secretary will need to say: “You know that I work for you—you need to trust me on this.”

Yet Steve Mnuchin is rapidly blowing up that credibility:

Larry Summers: Steven Mnuchin’s big claims show him in a poor light: “Last week… I felt sorry for… Mnuchin… https://www.ft.com/content/e5ad91fa-9409-384e-aaa1-ea0e81bf62b4

…forced by circumstance and his president to say and do things that undermined his and Treasury’s credibility…. [But] the secretary’s comments on Monday… look from the outside like unforced errors…. He crowed to the bankers present that “you have me to thank for the increases in your stock prices”. I cannot conceive of any of the 11 other secretaries I have known making such a statement. Leave aside the question of whether whatever credit is to be claimed should be done so on behalf of the president. Since when is the stock price of banks the objective or the standard of success for economic policy? And when, as will inevitably occur, bank stock prices decline, will Mr Mnuchin accept the blame? It was quite a day.

The secretary also… predict[ed] that within years the economy will be regularly growing at above 3 per cent…. not the view of mainstream forecasters… slow growth in the adult population… reduced immigration… it would require a productivity growth miracle. He cited no evidence to support…. Mnuchin claimed that Donald Trump’s tax cuts would be the largest in history. Relative to any relevant denominator… Ronald Reagan’s were far larger…. Mnuchin has made the claim that Mr Trump has given more financial disclosure than anybody else. This is ludicrous….

There will likely come a time when the Treasury secretary will need to invoke his credibility to support confidence in the economy, to stabilise markets, or to mitigate an international crisis. Let’s hope that when that moment comes, Secretary Mnuchin will retain some credibility. This will require an end to days like Monday.

Should-Read: Kevin Drum: Paul Ryan Isn’t Even Trying to Pass a Health Care Bill Anymore: “They just want to be able to tell their base that they tried… http://www.motherjones.com/kevin-drum/2017/04/paul-ryan-isnt-even-trying-pass-health-care-bill-anymore

…And President Trump wants to erase the taste of defeat…. If House Republicans were serious, they’d engage with the health care industry. They haven’t. If they were serious they’d care about the CBO score. They don’t. If they were serious they’d be crafting a bill that could pass Senate reconciliation rules. They aren’t even trying. If Senate Republicans were serious they’d be weighing in with a bill of their own. They aren’t wasting their time.

In the beginning, I think Paul Ryan really did want to pass something…. But he’s given up on that. At this point he just wants a piece of paper that gets 218 votes and demonstrates that the Republican caucus isn’t hopelessly inept. He knows it will be DOA in the Senate, but at least it will get health care off his plate once and for all…

Should-Read: Henry Farrell: The Thousand Day Reich: The Double Movement: “A simple Polanyian account of Trump and right wing populism would explain it… http://crookedtimber.org/2017/05/01/the-thousand-day-reich-the-double-movement/#comment-708419

…as a backlash to the renewed efforts of… neoliberals… to free the economy from the social restraints that make it bearable for human beings. It would argue that we are again seeing a ‘double movement,’ as right wing populist politicians take advantage of popular anger to restore a social and moral order which may look appalling to liberal eyes, but which reinstitutes (or, at least, claims to reinstitute) much desired social protections.

The best evidence for this perspective comes from the rhetoric of Trump and other right wing populists… a detestation for foreigners… anger towards a perceived cosmopolitan elite… a promise to protect ordinary Americans from both. Irrationalist philosophies. Racialist esthetics. Anticapitalist demagogy. Heterodox currency views. Criticism of the party system. Widespread disparagement of the ‘regime.’ Und so weiter. Orban and Kaczynski, pari passu, offer much the same blend. So, for that matter, does Theresa May in a watered down form. They may or may not deliver… but each bases their appeal on it….

Polanyi’s arguments about great transformations differ from civil society oriented approaches like Gellner’s in some important ways. Gellner is, in the end, on the side of the cosmopolitans…. Civic nationalism, for Gellner, is the homage that virtue pays towards vice–an identity politics homeopathically diluted…. Polanyi, in contrast, values community attachment and accompanying ‘thick’ notions of society as good things in their own right. While he also sees great virtue in some aspects of liberalism, he seeks always to prevent it from overwhelming society, both because of the devastation that it wreaks itself, and the corresponding devastation that may be wreaked by Society taking its revenge…