Blow and Krugman

In “Sanders Dismisses the Deep South” Mr. Blow says the candidate’s comments on the region’s importance would not help his chances in a general election.  Prof. Krugman, in “Robber Baron Recessions,” says studies have confirmed a decline in business competition, as the government turned away from anti-monopoly efforts.  Here’s Mr. Blow:

Bernie Sanders had an odd, and for me, unsettling comment at the Democratic debate in Brooklyn on Thursday night.

When CNN’s Dana Bash asked if he planned to take his nomination fight to the Democratic convention if Hillary Clinton does not clinch the nomination with pledged delegates alone, Sanders responded:

“Secretary Clinton cleaned our clock in the Deep South. No question about it. We got murdered there. That is the most conservative part of this great country. That’s the fact. But you know what? We’re out of the Deep South now. And we’re moving up.”

He went on to tout having won seven of the last eight caucuses and primaries. (In fact, of those seven, all except Wisconsin were caucuses, which are undemocratic in their own right.)

This wasn’t the first time in recent days that Sanders said something about voters in the Deep South that landed on my ear as belittling and dismissive.

When asked by Larry Wilmore on The Nightly Show whether he thought the primary system was rigged, Sanders responded: “Well, one can argue — people say, Why does Iowa go first? Why does New Hampshire go first? — but I think that having so many Southern states go first kind of distorts reality as well.”

And before that, when This Week host George Stephanopoulos pointed out to Sanders that Clinton was getting more votes than him, Sanders shot back: “Well, she’s getting more votes. A lot of that came from the South.”

This regional ridicule is a bad play for Sanders.

First, it’s not clear which states Sanders is including in the “Deep South,” a phrase whose meaning is hard to pin down. As a son of the “Deep South” myself, I will assume the list often used: Louisiana, Mississippi, Alabama, Georgia and South Carolina.

But Sanders has not only lost the “Deep South”; with the exception of Oklahoma, he’s lost the South as a whole.

It also must be pointed out that there is a racial dimension to Sanders’ dismissal, however inadvertent it is.

In general, the Southern states that Sanders says “distort reality” have some of the highest percentages of African-Americans in the country. The recent states he’s won, and on which he bases his claim of momentum, have some of the lowest percentages of African-Americans in the country. In each of the Deep South states for which there was exit poll data, black voters were the majority of Democratic primary voters. (There were no exit polls in Louisiana. The only state that had exit polls of the seven Sanders recently won was Wisconsin, where black voters represented 10 percent of primary voters in the state.)

Furthermore, as Nate Silver put it Friday, “Clinton has won or is favored to win almost every state where the turnout demographics strongly resemble those of Democrats as a whole.”

Now as for Sanders’s claim that the Deep South is the most conservative part of the country, one could argue that many of the other Southern states, as well as many of the states recently won by Sanders, are conservative in their own right.

It is true that blacks in general can be just as conservative as Republicans on some moral issues. But blacks tend to be quite liberal on the question of the size and role of the government. For instance, a 2012 Pew Research Center report found that “78 percent of blacks support government guarantees of food and shelter, compared with 52 percent of whites.” That position should have meshed well with Sanders’s expansive ideas.

As for the seven states Sanders won, four haven’t voted for the Democratic candidate in a general election since they went for Lyndon B. Johnson in 1964.

The only Southern state that has had that long of a drought for Democrats is Oklahoma — yes, the one southern state that Sanders won.

Furthermore, in 2012 The New York Times listed three of those southern states Clinton won — Florida, Virginia and North Carolina — as swing states, and only one of the recent states Sanders has won — Wisconsin.

Sanders simply has to own the fact that he didn’t sell his message well in the South, and those voters never warmed to his vision or his ability to execute it.

But he still needs to embrace and excite those voters should he become the nominee. He would need them for his much-ballyhooed political revolution. They will have to show up and flip Senate and House seats as well as governorships and control of statehouses.

One thing that the Affordable Care Act taught us is just how obstinate and obstructionist state officials can be and how their opposition to federal policies can hamper the full implementation of any law.

For instance, it wasn’t until Louisiana voters replaced the Republican governor, Bobby Jindal, with the Democrat John Bel Edwards that the state finally expanded Medicaid and thereby expanded health coverage to hundreds of thousand of people in the state.

That’s how revolutions work: From the ground up, in unlikely places and against the odds. A revolution is not evidenced by your success in territory you already control, but in territory that you don’t.

Sanders must abandon this “Deep South” talking point immediately. He’s better than this, and he should know better.

Apparently now stating demographic facts is a sin…  Here’s Prof. Krugman:

When Verizon workers went on strike last week, they were mainly protesting efforts to outsource work to low-wage, non-union contractors. But they were also angry about the company’s unwillingness to invest in its own business. In particular, Verizon has shown a remarkable lack of interest in expanding its Fios high-speed Internet network, despite strong demand.

But why doesn’t Verizon want to invest? Probably because it doesn’t have to: many customers have no place else to go, so the company can treat its broadband business as a cash cow, with no need to spend money on providing better service (or, speaking from personal experience, on maintaining existing service).

And Verizon’s case isn’t unique. In recent years many economists, including people like Larry Summers and yours truly, have come to the conclusion that growing monopoly power is a big problem for the U.S. economy — and not just because it raises profits at the expense of wages. Verizon-type stories, in which lack of competition reduces the incentive to invest, may contribute to persistent economic weakness.

The argument begins with a seeming paradox about overall corporate behavior. You see, profits are at near-record highs, thanks to a substantial decline in the percentage of G.D.P. going to workers. You might think that these high profits imply high rates of return to investment. But corporations themselves clearly don’t see it that way: their investment in plant, equipment, and technology (as opposed to mergers and acquisitions) hasn’t taken off, even though they can raise money, whether by issuing bonds or by selling stocks, more cheaply than ever before.

How can this paradox be resolved? Well, suppose that those high corporate profits don’t represent returns on investment, but instead mainly reflect growing monopoly power. In that case many corporations would be in the position I just described: able to milk their businesses for cash, but with little reason to spend money on expanding capacity or improving service. The result would be what we see: an economy with high profits but low investment, even in the face of very low interest rates and high stock prices.

And such an economy wouldn’t just be one in which workers don’t share the benefits of rising productivity; it would also tend to have trouble achieving or sustaining full employment. Why? Because when investment is weak despite low interest rates, the Federal Reserve will too often find its efforts to fight recessions coming up short. So lack of competition can contribute to “secular stagnation” — that awkwardly-named but serious condition in which an economy tends to be depressed much or even most of the time, feeling prosperous only when spending is boosted by unsustainable asset or credit bubbles. If that sounds to you like the story of the U.S. economy since the 1990s, join the club.

There are, then, good reasons to believe that reduced competition and increased monopoly power are very bad for the economy. But do we have direct evidence that such a decline in competition has actually happened? Yes, say a number of recent studies, including one just released by theWhite House. For example, in many industries the combined market share of the top four firms, a traditional measure used in many antitrust studies, has gone up over time.

The obvious next question is why competition has declined. The answer can be summed up in two words: Ronald Reagan.

For Reagan didn’t just cut taxes and deregulate banks; his administration also turned sharply away from the longstanding U.S. tradition of reining in companies that become too dominant in their industries. A new doctrine, emphasizing the supposed efficiency gains from corporate consolidation, led to what those who have studied the issue often describe as the virtual end of antitrust enforcement.

True, there was a limited revival of anti-monopoly efforts during the Clinton years, but these went away again under George W. Bush. The result was an economy with far too much concentration of economic power. And the Obama administration — preoccupied with the aftermath of financial crisis and the struggle with bitterly hostile Republicans — has only recently been in a position to grapple with competition policy.

Still, better late than never. On Friday the White House issued an executive order directing federal agencies to use whatever authority they have to “promote competition.” What this means in practice isn’t clear, at least to me. But it may mark a turning point in governing philosophy, which could have large consequences if Democrats hold the presidency.

For we aren’t just living in a second Gilded Age, we’re also living in a second robber baron era. And only one party seems bothered by either of those observations.

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