Saving capitalism

I was interested in income inequality before the pandemic. It made little sense that with what was supposed to be the best of times, at least as judged by the stock market, a booming economy seemed to offer little benefit to those at the bottom of the ladder and even to those in the middle. This is a basic mathematical reality that can be displayed in many different ways – charts, the proportion of the income captured by the top 400 people versus everyone else, etc. I had long understood that trickle down economics was a fiction and had I constructed a personal understanding of why things worked this way. Why this was a fascination is hard to explain, but I think it had to do with my life as an educator and the assumptions educators often make about All having opportunities if they worked hard and improved their personal capabilities. It just didn’t seem to actually work the way it was supposed to work.

The pandemic has only increased my concern. Those making the least are the same folks forced into the most dangerous work if they can find work at all. No online opportunities for those who work in packing plants and hair salons. 

My reaction to problems is to try to understand why things work the way they do as a starting point to see if anything can be changed. So, I have been reading a variety of sources looking for explanations that make sense. I have just completed Robert Reich’s Saving Capitalism: For the many not the few. While not exactly pleasure reading, the issues explained are approachable and the type of thing more folks need to consider.

I would describe Reich’s starting point as disputing the popular position that the U.S. is divided over the argument for free markets (Conservative) versus an activist government (Liberal) as an approach to the economy. Reich argues this is a convenient fiction used to distract citizens from the actual issue which is who makes the rules by which the economy operates. When it comes to the economy, politics is about the increasing influence of large corporations and wealthy individuals. Who is able to get elected as a politician or appointed as judges and what influences the decisions made by those in these positions The book is then divided into two main goals; why do large corporations and the very wealthy have increasing influence in political decision making and what political decisions have been made that increasingly advantage large corporations and the very wealthy. The interaction between these two sources explain the widening gap between the have and the have nots.

Issues involved in influence (a sample):

• Failure of campaign finance reform

• Citizen’s United decision and the increased influence of corporations versus individual citizens

• Politicians becoming lobbyists

• Cost of running for office

Political decisions influencing wealth (a sample):

• Patent and copyright durations and ease of renewel

• Monopolization of many sectors of the economy 

• Immense salaries to CEOs based on stock valuations which encourage a focus on profit margins returned to stockholders, stock buybacks, etc.

• Limited government commitment to enforcement of corporate violations of responsibilities and minimal penalties when violations are identified

• Low estate tax allowing massive fortunes to be passed on to those who did not in any way earn them.

These are examples from the two areas of emphasis. Reich’s point is that decisions made to address the second group of issues are influenced by the issues identified in the first group of issues. 

Reich argues that this system will eventually fail as capitalism requires consumption by all and as more and more of the population are limited in their ability to make more than minimal purposes the system will fall apart.