“…high unemployment (driven) by destroying workers’ bargaining rights has become a major source of rising inequality and stagnating incomes even for those lucky enough to have jobs…the deficit obsession that has been exerted has been used to scare the public…and bully the nation into slashing social programs – especially those to help the poor. Polls show Americans – even 45% of Republicans – support government action to reduce inequality…”
– Paul Krugman, NY Times January, 2014
CAPITALISM AT WORK: BUYING THE PLAYING FIELD
To some, income inequality should really be called opportunity inequality. Because those in control have massive amounts of money to control opportunity and manipulate it as they wish.
The result is a very unequal playing field of opportunity which exists at the result of actions by those who control it. A level playing field of opportunity is never what they want.
The capitalist system – as with all systems – can be manipulated by those who find ways to control it. Money is almost always the “ways”.
Follow the bouncing ball:
To really work, capitalism produces goods and services and people (consumers) buy them.
The myth is that if we let the free market rule, everything will work for everyone. But there is no ‘free market’. The free market is controlled by government rules and regulations. If not, a truly free market will be driven by greed for more and more, and will destroy itself. Just look back at 2008…it almost did. And who saved the “market” from self-destruction? The very government whose lack of control permitted the greed to run amuck.
If Big Business has the money it can produce all it wants. But if the consumers haven’t enough money to buy, there’s a hole in the bucket.
Today the rules and regulations “bought” from the government by Big Business, have made it possible for them to have so much money that they can continue to write or re-write the rules, regulations and laws, they can set wages and prices and those who have less money to begin with have less and less as time goes by. They also have less opportunity to succeed.
Think of dominoes falling: Big Business either reduces wages through “deals” with unions more interested now in maintaining themselves and their leaders than in helping their workers, or by sending jobs abroad forcing people into unemployment.
Cheap, available labor makes for much better bottom line profits.
People “left behind” by these actions, no longer have disposable money and buy less.
Then facing losses, business downsizes principally cutting more jobs. With less income and tax rates lower than even Ronald Reagan could make them, tax revenues decline and government no longer has the money to help balance and equalize opportunity and so cuts jobs and grants to States for such services as education and other community necessities.
One of the great myths heard ad nauseam for years and years is that cutting taxes for the rich produces more job opportunities and business growth. The word is don’t raise taxes on the “job creators”. No one bothers to prove the truth of this “line” because it is a lie and no one can. Lower taxes have not and will not create jobs. They will just continue to starve the government and make the rich, richer.
American producers can drive the economy and their incomes ever upward by finding new customers abroad, but in America long-term un and under-employment begins to weaken the fabric of the country. As people have less, debt increases…but everything else like standards of living, education and just plain consumer spending drops…like water leaking fast out of that hole in the bucket.
DESTROYING LIBERAL AMERICA
In the national prosperity America knew from the end of the Second World War until the mid-1970’s everyone worked. Big Business made big money and worked with unions to see that workers did well too.
The result of this rare cooperation in capitalism was the development of a massive Middle Class. The GI Bill of Rights brought higher education to levels of participation never before known in America’s history. We became the best educated people in the World…first among all nations in college graduates for years and years.
But not now.
Then, America manufactured…we made things. The world was our marketplace.
But not now.
We researched and we developed in all fields. Now it’s only high-technology that seems to interest us. We graduate some very bright research scientists – in physics for instance. Where do they go? Not into research labs but into Wall Street niche companies… developing new high-tech formulas for investing… so dense that those on Wall Street –including the very top CEO’s and hedge fund speculators – don’t even begin to understand them but sell them anyway.
When those in power use unlimited amounts money to buy the support of those in government, the way things are now is the way they will stay.
How did we come to this?
First, make government the most hated element in our system. Then starve it. The first was easy. You just had to say that government was not the solution but the problem. And you just kept saying it every chance you got.
Starving the government – was even easier. All you had to do was lower the tax rate. Less money coming in, fewer services to fund.
Lower taxes. Sound familiar? “Read my lips – no new taxes”. Perhaps the only words uttered by George Bush the First that anyone will ever remember. But like his predecessor Ronnie, he did raise taxes when he had to. Many say that helped make him a one term President.
Reagan dropped the tax rate from the low 60’s to the low 30’s and then dropped it lower.
The idea of lower and lower taxes became the mantra of politicians at all levels. Republicans gained Governorships all over America pushing taxes lower and lower. They had less money to work with so they cut government jobs and services accordingly. Less money, less government.
Government was “out of work” just as America’s industries sent jobs abroad to improve the bottom line, the price of their stock and the incomes of their top executives.
Tax rates continued to drop until today the great Warren Buffet pays a little more than 12% while those on his secretarial staff pay 31%. The absurd has become the norm.
There is no indication that anything will change in the near future. The cost of a college education increases startingly. The success of public education drops with no end in sight.
Congress deeply divided by a small, powerful force in the House of Representatives which believes that “no government” works best, continues to stymie any activity much less progress.
The President tries but is too often ineffective. He knows that jobs still go overseas; that many US companies keep corporate offices here in the States but truly operate in Europe and keep their profits away from US taxes; that labor unions have declined so that today the American Federation of Teachers is America’s largest union and always among the weakest; that the middle class continues to disappear even with Mom and Dad working – when either can work.
He also knows that once we establish a pattern of failure, it remains. 42% of all children in poverty in America today will never get out of poverty. In Denmark for instance, only 25% of children in poverty will remain there.
All of this is being driven by those in our society with so much money that they can keep any playing field uneven and unequal for as long as it suits their purposes.
To get an excellent look at this problem from one of the best minds in America find Robert Reich’s ”Inequality for All” on your On Demand movie list…it is on Optimum’s. A deep very real look at what is happening in America today.
Martin I. Hassner
Managing Editor and Executive Director
Liberal Party of NY