In his column “Lords of the New Economy”, Gil Smart refers to a Chrystia Freeland essay entitled “The Rise of the Global Elite”, whose subjects, according to Smart, being “Plutocrats… whom we might call the Lords of the New Economy.”
As reported by Freeland “One of his senior colleagues had argued that the hollowing-out of the American middle class didn’t really matter. ‘His point was that if the transformation of the world economy lifts four people in China and India out of poverty and into the middle class, and meanwhile means one American drops out of the middle class, that’s not such a bad trade.’”
Smart concludes “This is why globalization is a bad deal for this country….Us? We’re like the faced athlete at the bar, recalling the glory days. … Instead, we’ll blow another asset bubble, pump ever more illusory money into the system to goose consumption. It’s unsustainable and it’s dangerous… Concluding that free trade has hurt more than it’s helped might be a start, but we’re not prepare to go there…”
WATCHDOG:
Freeland’s essay is well worth taking twenty minutes to read. Please use the above link.
People who are ignorant of economics tend to think of an economy as a static pie from which one person’s gain is another person’s loss, a ‘zero sum game.’ Economists recognize that this is not the case: As people from Asia and elsewhere rise up on the economic ladder, they both produce more goods and services for exports but also create a greater demand for goods and services from others for imports. Classical Economics (John Marshall) would say that if each follows their “comparative advantage”, all will be better off. This may be simplistic, but there is much truth to it.
So the problem isn’t free trade, although there are circumstances for exceptions. Rather, it lies with, among other things, the US failure to implement and enforce a progressive tax system and the disregarding of laws regulating mergers and acquisitions, thus allowing parasitic oligopolies and monopolies to stymie the growth of our economy. NewsLanc has written often and at length and shared the views of others on the causes of US economic decline.
Freeland notes:
“Critiques of the super-elite are becoming more common even at gatherings of the super-elite. At a Wall Street Journal conference in December 2009, Paul Volcker, the legendary former head of the Federal Reserve, argued that Wall Street’s claims of wealth creation were without any real basis. ‘I wish someone,’ he said, ‘would give me one shred of neutral evidence that financial innovation has led to economic growth—one shred of evidence.’”
Freeland concludes:
“But if the plutocrats’ opposition to increases in their taxes and tighter regulation of their economic activities is understandable, it is also a mistake. The real threat facing the super-elite, at home and abroad, isn’t modestly higher taxes, but rather the possibility that inchoate public rage could cohere into a more concrete populist agenda—that, for instance, middle-class Americans could conclude that the world economy isn’t working for them and decide that protectionism or truly punitive taxation is preferable to incremental measures such as the eventual repeal of the upper-bracket Bush tax cuts.”
