Before discussing the surprising and constructive final chapter of Robert Reich’s “After Shock”, it is appropriate to supplement earlier reports on Barry Lynn’s “Cornered”, Tony Judt’s “Ill Fares the Land”, Joseph Stiglitz “Freefall”, David Johnston “Free Lunch”, Martin Jacques “When China Rules the world” with some excerpts from Jacob Hacker and Paul Pierson’s “Winner-Take-All Politics.”
Hacker and Pierson provide overwhelming statistics supporting the thesis that the top 0.1% percent (one in a thousand families, 15,000 out of a population of over 300 million) of earners have had their real incomes increased seven fold over the past three plus decades while middle class earnings have hardly risen at all.
“From the erosion of job security to the declining reach of health insurance, from the rising toll of home foreclosures to the growing numbers of personal bankruptcies, from the stagnation of upward social mobility to the skyrocketing of personal debt, the American economy that has delivered so much to the fortunate has worked much less well for most Americans. And this has been true not just over the past three years or thirteen years, but over the past thirty years….”
“How can hedge-fund managers who are pulling down billions sometimes pay a lower tax rate than do their secretaries? And why, in an era of increased economic uncertainty, is it so hard for their secretaries to form or join a union? How have corporate managers – who, along with Wall Street bigwigs, make up more than half of the top 0.1 percent –ascended from pay levels twenty to thirty times that of a typical worker to levels two to three hundred times as great? And why, over a gen3ration in which most Americans have experienced modest economic gains, have politicians slashed taxes on the rich even as the riches of the rich have exploded?
Their conclusion, as were the others, “Step by step and debate by debate, America’s public officials have rewritten the rules of American politics and the American economy in ways that have benefited the few at the expense of the many.” (Emphasis added.)
Months ago we quoted Barry Lynn as follows: ”
“A generation ago a highly sophisticated political movement appeared in the United States. This movement was decimated to taking apart the entire institutional structure that we had put into place, beginning in the mid-1930s, to govern our political economy by distributing power and responsibility among all the people. The goal of this movement was to enable the few, once again, to consolidate power entirely in their own hands.
“That’s why one of their very first targets was our antimonopoly laws. To justify this action, these revolutionaries preached an alternative philosophy of political economics – sometimes call free-market fundamentalism. This philosophy depicted our political economy not as political in nature but as a sort of organic mechanism that worked best if left untouched by human beings. The revolutionaries also promoted an alternative language of economic inquiry – based on the idea that economics is a science. Rather than describe the interaction of people in our economy as a function of law and politics, they preferred the languages of mathematics and mysticism.”
British historian TonyJudt was previously excerpted as contending the following “…there is a significant distinction between ‘socialism’ and ‘social democracy’. Socialism was about transformative change: the displacement of capitalism with a successor regime based on an entirely different system of production and ownership.
“Social democracy, in contrast, was a compromise: it implied the acceptance of capitalism and parliamentary democracy – as the framework within which the hitherto neglected interests of large sections of the population would now be addressed.” (Emphasis added)
In short, the post World War II balance between Democracy and Capitalism has largely ceased to exist. The problems today are not so much about competition from China and new technology as the abandonment of the prime purpose of our union, per the preamble of the United States Constitution: “We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.”
Instead we now have a nation as good as ‘Wall Street’ money can buy, buoyed by popular myths, personal fantasies of future wealth, and ignorance of economics.
Next: Robert Reich’s startling “What should be done.”
Interesting you frame the economy as a democracy issues. I’ve been using the term — democracy the economy — as the end goal. That means people have more control over their own economic lives through single payer health care that gives them more freedom to get the health care of their choice, worker owned businesses, consumer owned businesses (co-ops and credit unions), turning corporate welfare into taxpayer investment so tax payers profit and have a say in corporations that take tax dollars, reforming the tax system so it is more progressive and reforming the Federal Reserve so it not only reflects the banks but the broader economy and includes some elected representatives.
I really see this framing of the issue as one people can understand, one that is consistent with American political ideology and one that is achievable in a step-by-step basis.