Carrots for progressives
I went to a book event recently and asked a question during the Q&A that I’ve been wanting to write about. The event was a dual book launch for Zone Books’ Near Future series edited by Wendy Brown and Michel Feher. It’s a great series that focuses on rigorous examinations of political-economic structures but from an equally rigorous left angle. Brown’s famous book Undoing the Demos is in that series, Feher wrote for the same series about credit rating agencies in a book called Rated Agency.
The event launched two new books in the series, including Melinda Cooper’s newest Counterrevolution, which makes the argument that supply-side economics were an important part of the policy coalition of neoliberals and neoconservatives that co-constructed our contemporary social reality.
Specifically, the book’s argument is that neoliberalism is just as much about extravagance in public finance as it is about austerity: the ruling class instituted policies, largely using tax expenditure and exemptions, to publicly finance their social world while simultaneously defunding working class social worlds. I read it in advance of the launch event and it’s an amazing treasure trove of sources, arguments, and careful intellectual work. I bought a bunch of books that I’d never heard about until I read Cooper’s. I recommend it!
The launch event also featured the author of a new book called Discounting the Future, Liliana Doganova. While I knew about Cooper’s book I hadn’t heard of Doganova, but I’m glad they paired the launches, because her work on the political technology of discounting is very interesting and important. I didn’t get to ask her a question I had about discounting and teacher pensions, but I’m pretty sure her arguments go well with my instinct that left analyses of teacher pensions should focus more on discount rates and how they determine pension contribution policy rather than pension cost issues.
While I was interested in Cooper’s book of course, and found Doganova’s work fascinating, I actually attended the event to see one of the respondents give comments on Cooper’s book. Daniela Gabor is a macroeconomist with some of the best thinking about contemporary economic policy and public finance I’ve found. She’s the one that put the concept of derisking on the map, and has an argument about the Wall Street Consensus about which she’s publishing a book soon. I really wanted to hear what Gabor said about Cooper’s book, but I went with a specific question I wanted to ask the both of them, a question I’ve come across in my work on school finance, specifically the Inflation Reduction Act.
(It really was a star-studded event, since the political economist Geoff Mann commented on Doganova’s book, and Brown was there in the audience. Plus it was at CUNY, which is a fantastic institution.)
One of Cooper’s recurring themes in her two books—if you haven’t read her first one, Family Values, I highly recommend it—is that socialists and communists should engage in the same wonky class struggle that the neoliberals and neoconservatives did in the 1970s and 1980s in their construction of the current regime of economic and social policy. Counterrevolution is all about supply-side economics, tax expenditure policy, and the Federal Reserve, but the subtext—which sometimes enters into the main text—is that socialists and communists should find policies that would do redistributive work to create extravagance for the diverse working class. She wants to socialize and communize finance.
Of course I like her work a lot, since this is very much in line with my work on this newsletter. I’m always searching first to understand the current order from a socialist perspective and second to find policies to recommend that would benefit the diverse working class in education finance. The question I wanted to ask her at the event was whether she thought the direct pay tax credit policy in the Inflation Reduction Act qualified as that kind of policy. It’s an actually-existing federal policy that uses the same tactic—tax expenditure—to finance public infrastructure that reduces carbon emissions.
Gabor, in her comments, left me the perfect opening to ask this question and expand it. Gabor commended Cooper for her careful argumentation and pushed her to recommend policies that might fit this tall order: what policies would qualify for this communized finance? What should leftists fight for?
Gabor rehearsed her argument that policies in Biden’s industrial policy—in the IRA and the CHIPS act—shouldn’t qualify precisely because they are derisking policies, which, Gabor says, are “carrots without sticks” when it comes to capital. If you just give carrots to the ruling class to do the things you want (which is largely what the IRA does), that doesn’t stop them from doing what you don’t want them to do. Gabor argues that you have to use sticks also. Pretty intuitive argument.
And yet. The direct pay tax credit for local governments, one of the many financing policies in the IRA (and arguably the green bank capitalization policy) aren’t just carrots for capital. They actually change the carrot-stick-string arrangement. Or, continuing with that metaphor maybe, there’s a different horse that we’re riding who gets the carrots? The direct pay tax credit is a bottomless well of public money for reimbursement that goes right to local governments like school districts rather than private companies, which previous iterations of the tax credit policies had done.
I guess I was wondering whether these leading lights of left finance agreed with my sense that the direct pay tax credit (and green bank capitalization) were the kind of policies that socialists and communists should get excited about, push forward, study, advocate for, etc.
I sat down in the audience with a lot of excitement. Wendy Brown introduced everyone, the presenters gave their presentations, the commenters gave their comments, and after some back and forth they opened up the Q&A. I didn’t want to raise my hand first (I get nervous about crowding the space), but after the first question was asked and got answered, I raised my hand, which was shaking a little bit.
I asked about the direct pay tax credit being a candidate for policies socialists and communists should be excited about, and whether it skirted the carrot-stick problem that Gabor mentioned. I tried not to ramble.
After a pause in the wake of my question, which was probably convoluted, Cooper gave me a very short answer. She said “I didn’t know about that policy and, yes, it seems like it would be one we should get behind” or something to that effect. Then Gabor, whom I’d addressed with the question as well, smiled and agreed with Cooper, adding something that’s had me thinking a lot.
She said “the policy is a big mishmash of interests, and the direct pay tax credit was a carrot for progressives, yes, but many other policies are carrots for capital.”
I was chuffed that these very smart people who write very fancy books that I like a lot agreed with my instinct, but I also liked this notion of the carrot for progressives, which not only confirmed my sense that certain policies are things to stand on when imagining the kinds of policies we want in a socialist America, but that there exists a coalitional politics that can bring them into being.
As a coda, Gabor mentioned that she’d met with economic advisors to Biden who’d written the IRA legislation and she mentioned that it’s an empirical question as to whether local governments are actually using this tax credit program, which is true. Thankfully, it’s got a 10 year window (except, of course, if Trump is elected president and gets rid of all of it).
So I think the next step is to go out there and figure out who’s using this program, particularly school districts, and study them carefully, shining a light on how this is actually going and how we can improve and expand it, working this socialist-communist crack in the neoliberal edifice and fight for diverse working class infrastructure financing.