The yutzes on the right will claim that 'government regulation blah blah blah' is killing capitalism, but can anyone point to a time when capitalism ever worked in building a stable middle class and democratizing capital without heavy regulation and aggressive, leveling taxation?
I'm not an economist but the golden age of the American economy, roughly the period from World War II until the middle 1970s, corresponded with heavy taxation of individuals (the upper rate during that time period was almost 90 percent for some income brackets), active and successful trade unionism (more than a third of workers were in a union) and massive government spending (in defense, roads and infrastructure, higher education especially science and math and engineering, and research and technology).
America basically civilized capitalism via taxation, unions, and government spending, in the process transferring wealth from folks who hoarded it - rich people and corporations - to entities that spent it and hired workers: unions and government.
But that balancing act started to erode in the late 70s. The oil crises of that decade ended the era of cheap gas, but that wasn't the main culprit. Economic powers such as Japan and Germany, for instance, succeeded in spite of paying more for oil and energy.
As Robert Reich opined in The New York Times on Labor Day, the 70s also saw revolutions in global communications and shipping that allowed companies to cheaply manufacture goods over seas for export back into the U.S. Capital followed, pouring out from the U.S., Europe and Japan into non-union third-world countries eager to join the global manufacturing economy.
The anti-tax revolts launched in California in the late 70s culminated in the election of Ronald Reagan in 1980. Reagan slashed taxes for the wealthiest Americans; with less tax money, state and federal governments starting cutting back spending on education but also on infrastructure and other needs - with the federal government eventually spending money only on three things: defense, Social Security, and interest on our debt (debt of course built up after taxes were slashed).
And in my opinion the death blow for America's economy was the fall of the Soviet Union. Franklin Roosevelt and the New Deal started the process of humanizing and civilizing capitalism in the 1930s. Unions and the Democrats carried that on after the war. But I think one reason corporations went along with that process was a shared goal of wining the Cold War. Everyone was invested in defeating Communism and showing that the American way was better. Everyone knew the best way to demonstrate that was by building a massive middle class, a middle class who's wages were set by unions, whose taxes would pay for public schools and universities, the common defense, government pension programs like Social Security and Medicare, etc.
The nexus of: globalized communications, shipping and capitalism; the fall of the Soviet Union; reduced taxation for the wealthiest Americans; the new left's (hippies if you will, not the civil rights movement) attack on the American liberalism in the 1960s have now culminated in the sobering stat that 14 percent of Americans live below the poverty line.
Of course, the wealth is still there. The capitalist class is going great. The stock market is thriving, but no one is working and one in seven Americans are living in poverty. Banks get bailed out by the federal government then refuse to lend money to others. No, the swells are doing great. They're hoarding their money, or worse, investing it in emerging capitalist hell holes like China, India, Brazil, etc. countries where investment is thriving but trade unionism is not.
And some how, in a nation where capitalism has resulted in 14 percent of our fellow citizens living below the poverty line, being labeled a 'socialist' is a negative?
A few, non-economic random thoughts
- Last weekend I extolled The Replacements. This week I urge folks to rediscover Elvis Costello, but from his 'angry' period of the late 70s and early 80s, especially 'Trust' and 'Imperial Bedroom.' Hard to beat those records for distilled anger and wit.
- But if you're looking for a brilliant and forward thinking album check out 'Mind Bomb' by The The. One of the most underrated and overlooked bands and records of all time.
- Like a car wreck, need to check in on the football Heels today at home versus Georgia Tech. I want the Heels to win at everything, but the football program just seems cheap now, tainting the finest institution of higher learning of all time.
- For the record, Jim Love is the sweetest man of all time.
No comments:
Post a Comment