I guess I’m supposed to talk about the election tomorrow. But I don’t want to. It looks bleak. FiveThirtyEight currently gives the Republicans a 74% chance of taking the Senate. And even worse, the chance of the Republicans getting 53 seats is only slightly less than them getting 52. Meanwhile, in my home state of California, the Democrats stand a good chance of losing their super-majority. This is important because the state budget is almost unmanageable without a super-majority. Now, I’ll admit: Jerry Brown was an excellent governor even without the super-majority. But it has been smooth sailing with it, and Brown hasn’t shown much interest in the question.

For years now, I’ve been arguing that turnout is everything. What I’ve seen is that there simply aren’t many “swing” voters. What determines elections is turnout. All the campaigns with the drum beat to “move to the center” do is create candidates that are more to the liking of the power elite. I’m not suggesting that the Democrats could run anyone at all. But moving the Democratic Party ever to the right does not help. In fact, I question if it hasn’t hurt the party. For the handful of “swing” voters it attracts, it repels a large number of regular voters who are not wrong to think that there isn’t much difference between the parties when it comes to the primary issue for most people: the economy.

Democratic Long Shots

Daily Kos provides a nice roundup of the polling data. So let’s go through the races and look at what we have. In Alaska, Begich is losing by 3 percentage points. Given the difficulty of polling, this one isn’t a lost cause. It’s still a long-shot, but it could fall the Democrats’ way. Similarly, Udall is down by 2.6 percentage points in Colorado. Since I’m a pessimist, I think we will lose these races. But there is hope.

Arkansas is a lost cause. Pryor is behind by 8.8 percentage points. You really have to believe in fairies to hope for this one. But maybe fairies really do exist. Similarly, although Grimes is down by less than Pryor at 7.6 percentage points, she is definitely in fairy territory. Landrieu is down 5.0 percentage points in Louisiana. Maybe that’s not fairy territory. Let’s call it orc territory, because there are many Republicans who I wouldn’t be surprised to learn are orcs. But I’m pretty sure orcs don’t really exist and I’m pretty sure that Landrieu is going down.

Close Races in Republicans’ Favor

The Republicans need six seats to take control of the Senate, and if these races go the way I expect, the Republicans gain four. That means that they only need to win two of the close races. So let’s look at them.

In Georgia, Nunn is currently trailing by 0.9 percentage points. In addition, she needs 1.7 percentage points to avoid a runoff that she would likely lose. I tend to think that Nunn will lose this race but it will go to a runoff. And then in the runoff, she will be destroyed. It is possible that she could win this race. But I am not expecting it; that means the Republicans only need one seat.

And they will likely get that seat in Iowa where Braley is down by 1.6 percentage points. It’s weird though. For some reason that I can’t put my finger on, I have a lot of hope for this race. But I wouldn’t put any stock in it. It is probably just that Ernst is such a nut that I find it hard to believe that the reasonable people of Iowa would vote for her. But vote for her they probably will, and that gives the Republicans control of the Senate.

In Kansas, the independent Greg Orman has a razor thin margin. I think he probably will manage a victory. What I don’t understand is why most Democrats think he will caucus with us. I think he’s been pretty clear that he will caucus with whomever has the majority. I admit, if he were the deciding vote, he would almost certainly caucus with the Democrats. I don’t think that’s going to be up to him. But it doesn’t matter because the Republicans already have this seat.

Close Races in Democrats’ Favor

There are two close races that ought to go the Democrats’ direction. Shaheen in New Hampshire is 3.0 percentage points above hunka hunka burning love Scott Brown. I wouldn’t bet the cash that is currently in my wallet on a Shaheen victory. But it looks pretty good. Similarly, Hagan is up by 1.5 percentage points in North Carolina. But notice, if either of those races go to the Republicans, it will bode extremely poorly for the chances of other Democrats in worse races.

Bottom Line

If we add to these races the certain pickups in South Dakota[1], West Virginia, and Montana, I see the Republicans having a 53-47 majority starting next year. It is certainly possible for the Democrats to hold the Senate, of course. If Nunn and Braley manage to win, control will be up to Orman and I think we will see a 50-50 Senate with Democratic control. Most of the models give that a 20% chance of happening. I think that’s about right. Tomorrow is going to be a long night. I think I need to stock up on alcohol.

[1] Let me say a word about South Dakota. There was once some excitement that Weiland might be able to win that race because there is a strong third candidate. I always thought this was a pipe dream, and currently Weiland is down by 13.5 percentage points. But regardless, I would have hated to see Weiland win in this way. We are Democrats: we believe in democracy. Let the LePages try to subvert the democratic process. And for the record, shame on Eliot Cutler for being the spoiler in this race. His run in 2010 was fine, but when it became clear that all he was accomplishing this time was to make Paul LePage governor, he should have dropped out.

I just had a thought. We all know that you can’t have a capitalism in which one person owns everything. Capitalism depends upon people selling things to each other. So I’ve always thought this means that inequality can only get so bad — eventually, something has to give. Traditionally, there has been an oscillation between the rich and the rest having power. The rich had power during the Guided Age and they have power now. And the rest had more power in the 1940s and 1950s. It’s interesting, isn’t it, that when the middle class has power everyone does well; when the rich have power, things get really unstable. But I’ll leave that for you to think about for extra credit.

The Reagan presidency is really when things turned around in a big way for the capitalists. In fact, they turned around so well that by the late 1990s, the economy was out of kilter. The middle class just wasn’t able to buy all the crap that the capitalists wanted to sell. The normal thing to do in this case would be to allow incomes to become more equitable. But as we all know, power concedes nothing without a demand. The rich were not going to let go of any of their power, so they had to find a way for the economy to continue on without losing any money.

But even if the rich are not smart, they have enough money to hire smart people. They came up with a great idea. It wasn’t necessary to pay workers more. The rich could just loan the workers money. This was done explicitly as well as implicitly by allowing workers to think that their houses were worth far more than they really were. This had the great byproduct of eventually leading many of those workers to lose even the houses themselves. My but the rich played that well!

The question is what we are going to do now. This gets back into the whole question of secular stagnation. It is possible that a really crummy economy with high levels of unemployment is the new normal. Now if that were all, it might be fine. I mean, as long as the rich were getting their ton of flesh, what politician is going to care? But even with almost all of the recovery going to the people who least need it, this is not a situation they are going to accept. I’m sure people are working on the issue even as you read this. There must be a way to set up a situation where the rich can get ever richer off the backs of the rest without the rest actually benefiting.

I think I have found the solution! And the truth is that I’m amazed that I didn’t think about it before. It’s so simple: slavery. That’s effectively what the financial system has turned most of America into anyway. I’m not suggesting total slavery of course. We would still need a small middle class that would support slavery in terms of enforcement. Think of it as the liberal class as discussed in Chris Hedges’ book, Death of the Liberal Class. But otherwise, it is slavery for all!

And we are already prepared for it. After all, haven’t conservatives been telling us for years that government assistance is worse than slavery? Obamacare is worse than slavery? Social Security is worse than slavery? Do you know what’s not worse than slavery? Slavery! This is simple Aristotelian logic: something as bad as slavery is better than something worse than slavery. A = A! (Note clever “Ayn Rand never understood Aristotle” reference!)

I am aware that some might think most Americans would make rather bad slaves. We might resent being slaves, even though we were already suffering a much worse fate with government programs like the mortgage interest deduction. But that’s what’s so great about slavery. As Edward Baptist explained in The Half Has Never Been Told, the rich can just torture us if we don’t constantly increase productivity — just like they did to slaves in the good ol’ days of the 19th century when America was still free. I don’t know about you, but I am very innovative when I know if I’m not, I’m going to be whipped. And what options would I have anyway? I wouldn’t want to go back to my old state of paying progressive income taxes, which is worse than slavery.

How we will get from our current state of government programs that make our lives worse than slavery and actually being the chattel of the rich, I cannot say. But it does seem the next logical step in the evolution of capitalism. I just hope they don’t make me change my name.

Anatole Kaletsky wrote a really good article over at Reuters, The Takeaway From Six Years of Economic Troubles? Keynes Was Right. His argument is that since the financial crisis, we have seen that fiscal stimulus has greatly out-performed monetary stimulus. And the reason for this is that interest rates are already at zero. Monetary stimulus works really well when the economy is performing reasonably. But in the kind of depression we are now in, fiscal stimulus is king. This really shouldn’t be controversial to anyone who has taken Econ 101. But sadly, the field of economics has become so ideological that the basics of the science get lost, as the theory is twisted into knots to justify preexisting conclusions.

This got me thinking about monetary policy in a more general sense. I’ve long been an advocate for a higher inflation target. Our obsession with low inflation is simply a reflection of the fact that we care far more about the owners of capital than we do about workers. Allowing more inflation would encourage spending and thus create jobs. But there is more to it than that.

With the current 2% inflation target of the Federal Reserve, we are already more or less at zero inflation. This is what Alan Greenspan thought. He assumed that the official inflation numbers overstated the level of actual inflation and that a 2% inflation target would cause actual inflation to be roughly zero. This is the level at which half of all products are going down in price and half are going up. This is a very bad situation that encourages people to spend less and makes getting out of debt much harder.

When the economy tanks, it is normally because too many people are trying to pay down their debt. This normally goes along with low inflation — making the debt burden even worse. And the Federal Reserve is largely impotent, because money is already cheap. It can’t get any more cheap. This is why the Fed has been forced to do things like quantitative easing. But even that will only be done for the bare minimum amount of time required. Meanwhile, we can’t use fiscal stimulus because much of the world has decided that the most obvious way to help a struggling economy — the way that has helped economies for decades — is simply unacceptable.

We really do live in a conservative world now. The direct solutions to problems cannot even be discussed. When we wanted to reform our healthcare system, we couldn’t just nationalize the insurance industry; we had to come up with a neoliberal monstrosity where the government feeds billions of dollars through the “free” market. We can’t just give poor people money; we have to provide tax credits. And we can’t just stimulate the economy directly by, for example, hiring more teachers. No, we have to take the indirect approach and offer free money to the rich to encourage them to invest. It’s all madness.

This is sadly not the fault of the Republicans. They are who they are. All this neoliberal policy is the default because the Democratic Party has given up on liberal policy. It is now only interested in economic policy that its funders find acceptable. Hence: Obamacare, EITC, and the sequester! But none of that matters because the Democratic Party has been on the following edge of same sex marriage. All of us Democrats are so proud.

Looking at the polls, it is hard not to get depressed. Right now, it looks like the Democrats are as likely to hold 47 Senate seats as 48. And if the polls are off in the Democrats’ favor, this could be a chilling election from a liberal point of view. Of particular interest is Georgia, where Michelle Nunn is now trailing and David Perdue may win outright. This is not because she’s doing poorly. Support for the libertarian candidate has cratered. And like I always say: libertarians are just embarrassed conservatives. When push comes to shove, they are reliable Republican voters.

All hope is not lost, but most is. What bugs me is that our entire political system is subverted by these off-year elections when only the most conservative voters bother to show up. It isn’t just that we have to deal with oscillating power structures. The bigger problem is the effect that it has on the Democratic Party. It provides a reason for it to remain its usual economically conservative self. I still hear liberals claim that we have to be “moderate” in order to win elections. But this is madness. The truth is that during presidential election years, people are eager to vote for actual liberal policy. And during off-year elections, no amount of “moderation” is going to make the conservative electorate vote for the Democrats.

If I were set up for the rest of my life, I would be inclined toward a philosophical position, “The people don’t care about our republic, so what are you going to do?” But I am not set up for the rest of my life, and so I see the lack of interest in the simple act of voting as evil. I’m reminded of young Carey Wedler who thought that all she had to do was vote for Obama and he would fix all our problems. Who thinks it is enough to vote for president and then ignore politics the rest of the time? Such people don’t even deserve a president as good as Obama.

Of course, the problem isn’t just with the young and other liberals who can’t be bothered to vote. The bigger problem is that roughly half of the citizens of this country continue to support the Republican Party that has clearly gone off the rails. Thomas Frank wrote about this over at Salon this morning, Righteous Rage, Impotent Fury. In the article, he returns to Kansas to see what is going on. I suspect when he set out to write the article, he was planning to write a positive piece about how the people of Kansas were finally throwing off their knee-jerk acceptance of any candidate who had an “R” after his name. But the polls have gotten tighter. The Kansas Senator Pat Roberts could very well win this election. And the truly disastrous governor Sam Brownback could win in the polls are a little off. Regardless, Daily Kos gives Brownback 49% of the vote. This is after he brought in Art Laffer to justify an enormous push of resources from the poor and middle classes to the rich, bankrupting the state and most especially its educational system.

Frank is more colorful in describing what is going on. He references rotten boroughs, where low population allowed the seats to be effectively bought. This is more or less what we have in the Senate with states like Wyoming. But now the seats don’t even have to be bought. The people willingly vote for officials who actively harm them.

So we liberals will tough it out through this election and look forward to 2016 when Democrats are likely to do better. But the Democrats on offer will be the usual moderates. If we are very lucky, two years from now, there will be a “not quite as bad as the Republicans” wave. Hooray.

Secular stagnation is the idea that that the bad times are here by default — the only times we will get full employment is when we have bubbles like those in the housing and high tech markets. The idea is not new, but it has become quite popular for the past year are so since Larry Summers started pushing it. I don’t think there is any real doubt about it, but I haven’t heard anyone discuss what we are going to do about it. And on the right, most people don’t even accept that it is happening.

It’s interesting that Summers should become the man most associated with the concept. He was, after all, one the people in the Clinton administration who pushed the “strong dollar” policy. And a big part of the story of our economic troubles comes from the fact that we continue to pursue this policy. A strong dollar means that we are going to have a trade deficit. As Dean Baker explained, there are only three ways to offset this: business investment, consumer spending, or government spending. Nothing will make businesses invest when there isn’t demand. What we’ve depended on for the last three decades is giving consumers more credit to spend rather than increasing wages; this is morally wrong and unsustainable. And as for government spending, well, Baker put it well, “Unfortunately, our politicians are religiously opposed to budget deficits in the same way that many question evolution.”

What annoys me is that people automatically think that a strong dollar is a good thing. It sounds great, right? But we don’t want a strong dollar; we want a strong economy. A strong dollar allows us to buy a bunch of stuff from outside the country. That’s great if you already have all the money you need. But if, like 99.9% of all Americans, you need a job, then the strong dollar is a very bad thing. A strong dollar creates jobs outside America. Let me just say it: a strong dollar policy is unpatriotic.

Then why is it that all administrations are in favor of a strong dollar? Why was Larry Summers, the new Chicken Little of secular stagnation, so keen on a strong dollar? I don’t know. But I think the cinematic Deep Throat gives us a clue, “Follow the money.” Or as The Dude put it, “It’s like what Lenin said, you look for the person who will benefit, and…” The Dude never completes the thought, but, “You know what I’m trying to say…” So who benefits from the strong dollar policy? That’s pretty obvious: the rich.

What’s annoying about the phrase “strong dollar policy” is that it isn’t Orwellian. It isn’t like the “clear skies initiative,” which was a proposal to pollute more. The strong dollar policy really is what it claims to be. We would all like the dollars we have to be worth as much as possible. The problem is that along with that strong dollar goes a weak economy. It’s an opportunity cost. The people are asked, “Do you want a strong dollar?” And of course they say yes. But it would be different if they were asked, “Do you want a strong dollar and be unable to find a job?”

If you want the details of this, go read Dean Baker’s article or mine from last year, Larry Summers’ Last Chance. But the main thing is that as long as we continue to vote in small numbers, we will continue to be ruled by people like Clinton and Obama who don’t think twice about pushing a strong dollar policy. That’s because they fear the rich a lot more than they fear the people.