April 8, 2019 at 2:08 pm #41424
“The United States has the highest income inequality in the Western world, and this can only be made worse by the massive new tax cuts overwhelmingly benefiting the wealthy.” This according to a study done for the U.N. Human Rights Council.
The report cites vast numbers of middle-class Americans “perched on the edge,” with 40 percent of the adult population saying they would be unable to cover an unexpected $400 expense.
The study criticized the drumpf administration for stigmatizing the poor and saying those receiving government benefits are lazy and should be working. The report found just 7 percent of benefits recipients are not working.
“The statistics that are available show that the great majority of people who, for example, are on Medicaid, are either working in full-time work — around half of them — or they are in school or they are giving full-time care to others.”
But before criticizing the report, let’s further examine the notion that here in the U.S., our near 250 year old experiment with capitalism is not working because that’s what needs discussion. This is not to say that the capitalistic model in the U.S. has never worked, because to a large extent it has worked previously. But before laying out what went wrong, in might be informative to recall a bit of recent history.
“The October 1944 edition of Fortune magazine carried an article by a corporate executive that makes for amazing reading today. It was written by William B. Benton — a co-founder of the Benton & Bowles ad agency — and an editor’s note explained that Benton was speaking not just for himself but on behalf of a major corporate lobbying group. The article then laid out a vision for American prosperity after World War II.”
At the time, almost nobody took postwar prosperity for granted. The world had just endured 15 years of depression and war. Many Americans were worried that the end of wartime production, combined with the return of job-seeking soldiers, would plunge the economy into a new slump.”
“Today victory is our purpose.” “Tomorrow our goal will be jobs, peacetime production, high living standards and opportunity.” This depended on American businesses accepting “necessary and appropriate government regulation,” as well as labor unions. It depended on companies not earning their profits “at the expense of the welfare of the community.” It depended on rising wages.
“These leftist-sounding ideas weren’t based on altruism. The Great Depression and the rise of European fascism had scared American executives. Many had come to believe that unrestrained capitalism was dangerous — to everyone.
In the years that followed, corporate America largely followed this prescription. Not every executive did, of course, and management and labor still had bitter disputes. But most executives behaved as if they cared about their workers and communities. C.E.O.s accepted pay packages that today look like a pittance. Middle-class incomes rose faster in the 1950s and 1960s than incomes at the top. Imagine that: declining income inequality.
And the economy — and American business — boomed during this period, just as Benton and his fellow chieftains had predicted.
Things began to change in the 1970s. Facing more global competition and higher energy prices, and with Great Depression memories fading, executives became more aggressive. They decided that their sole mission was maximizing shareholder value. They fought for deregulation, reduced taxes, union-free workplaces, lower wages and much, much higher pay for themselves. They justified it all with promises of a wonderful new economic boom. That boom never arrived.
Even when economic growth has been decent, as it is now, most of the bounty has flowed to the top. Median weekly earnings have grown a miserly 0.1 percent a year since 1979. The typical American family today has a lower net worth than the typical family did 20 years ago. Life expectancy, shockingly, has fallen this decade.”
But again, one writer’s opinion can always be challenged as cherry picking facts and presenting a one sided view. But the same opinion appears to be held by not only op ed writers but by many of the very successful business operators, so much so only a few can be presented here to keep an already long post as short as possible.
“One of America’s highest-earning hedge fund managers is sounding the alarm on the widening gap between the wealthy and the poor in the U.S.
Ray Dalio, founder of $160 billion hedge fund Bridgewater Associates, has published a two-part series of LinkedIn posts arguing that the increasing disparities in income, wealth, and opportunities among Americans “pose existential threats to the U.S.”
“These conditions weaken the U.S. economically, threaten to bring about painful and counterproductive domestic conflict, and undermine the United States’ strength relative to that of its global competitors,” Dalio wrote in the two LinkedIn posts published Thursday and Friday.
Citing a number of stats that illustrated how income growth has stagnated among the bottom 60 percent of earners – while skyrocketing among the top 20 percent – Dalio concluded that U.S. capitalism is “not working well for the majority of Americans.”
“It’s producing self-reinforcing spirals up for the haves and down for the have-nots,” he wrote.
For instance, Dalio wrote that the top 40 percent of earners had on average six times as much wealth as those in the bottom 60 percent in 1980. As of 2016, the top 40 percent had on average more than ten times as much wealth as the bottom 60 percent, Dalio said, citing data from the Federal Reserve’s latest survey of consumer finances.
“Most people in the bottom 60 percent are poor,” he wrote. “And they are increasingly getting stuck being poor.”
The main reasons why capitalism has stopped working for most people, according to Dalio, are the rise of technologies that replace human workers, the globalization of American companies at the expense of American workers, the rising prices of financial assets resulting from post-2008 monetary policy, and the focus of policymakers on budgets rather than returns from investments.
“While the pursuit of profit is usually an effective motivator and resource allocator for creating productivity and providing those who are productive with buying power, it is now producing a self-reinforcing feedback loop that widens the income/wealth/opportunity gap to the point that capitalism and the American Dream are in jeopardy,” Dalio wrote.
Based on this diagnosis, Dalio prescribed a way to reform capitalism to “provide many more equal opportunities and to be more productive.”
Yes, I believe equal access has been destroyed and this failure falls squarely on the shoulders of those that have adopted the Conservative Republican hypocrisy of economics. That includes those that have adopted their mantra although not necessarily been hugely successful themselves.
I understand that like almost any topic of an economical nature, there are so called experts with differing opinions, but when you stack up the resources, the scales are tipping in agreement with the notion that capitalism in the U.S. has failed. Perhaps it can be fixed, but it will not be fixed by those in power now. What rules the landscape now and in the recent past is driven by “meritocratic extremism.”
“The current level of rising wealth inequality, set to grow still further, now imperils the very future of capitalism.”
The conservative doctrine that “Capitalism requires inequality of wealth to stimulate risk-taking and effort; governments trying to stem it with taxes on wealth, capital, inheritance and property kill the goose that lays the golden egg” is inaccurate.
“Capital is blind. Once its returns – investing in anything from buy-to-let property to a new car factory – exceed the real growth of wages and output, as historically they always have done (excepting a few periods such as 1910 to 1950), then inevitably the stock of capital will rise disproportionately faster within the overall pattern of output. Wealth inequality rises exponentially.”
“The process is made worse by inheritance and, in the US and UK, by the rise of extravagantly paid “super managers”. High executive pay has nothing to do with real merit, it is much lower, for example, in mainland Europe and Japan. Rather, it has become an Anglo-Saxon social norm permitted by the ideology of “meritocratic extremism”, in essence, self-serving greed to keep up with the other rich. Rising inequality of wealth is not immutable. Societies can indulge it or they can challenge it.”
What we are seeing now is this challenge. Whether or not it succeeds depends on the realization of the many in denial about what is happening, not the agreement of those that already understand as to who should lead the challenge.April 9, 2019 at 5:31 pm #41432
Great piece Andy. I’m sharing it.April 9, 2019 at 8:16 pm #41433
Electing Bernie is the solution. But if he is not the nominee then another 4 years of Trump is okay with me.April 9, 2019 at 9:20 pm #41434
Sad day for you. Fear, blame and shame just aren’t effective advocacy tools. Did you learn anything else?April 10, 2019 at 11:44 am #41435
Is fear, blame, and shame a Nina Turner talking point? Can you make one post without saying that?
And, is there anything factually incorrect about my statement? If not Bernie, then Trump. That’s what you’re saying right?April 10, 2019 at 12:15 pm #41436
I’ve made a freaking ton of them without saying that.
No, that isn’t what I am saying.
Go read it again try harder think about it. Then we’ll talk.April 10, 2019 at 1:58 pm #41440
“I personally will not vote for Trump. There are candidates who are not named Sanders, who I will vote for, should they get the nomination. There are also candidates I absolutely will not vote for, named Beto and Harris.”
This reads to me like you are saying that if it comes down to Beto vs Trump or Harris vs Trump, you wouldn’t vote for Harris or Beto vs Trump. Am I wrong?April 10, 2019 at 2:23 pm #41441
Yeah, sorry – if your ballot has “Trump” and “O’Rourke” on it and you don’t vote for O’Rourke, you are helping Trump win. PERIOD. Sorry, don’t care what rationalization or excuse you use. It’s just a fact.April 10, 2019 at 2:27 pm #41442
“Capitalism” has never worked well on its own. It must be checked by government control and support. We found this out in 2008 – remember when “capitalism” almost collapsed until the US government stepped in with trillions of dollars in loans and investments?
Only die-hard delusional libertarians believe capitalism can work without a big government role. That has been shown time and time again.
The only real question is: what should the government’s role be? How big, how intrusive? E.g., health care run solely by private industry clearly does not work except for people who don’t get sick. We already have some government control of health care; clearly, we need a lot more to make health care affordable and practical for everyone.
I think the government should be involved only when absolutely necessary. The federal government should be the last option, not the first – and that’s where I differ with many of the lefties. I may want the government taking a larger role in health care, but I don’t want it making cell phones.April 10, 2019 at 4:51 pm #41443
I will not cast a vote for Harris. No. Beto? Potentially.
Three options kids, vote major, vote other, no vote.
Not helping someone is not the same as helping their opponent. Doing that means actually helping the opponent; otherwise, no confidence.
If it is Harris, that is absolutely going to happen.
The rest best sell it.
New day, new politics. Deal.April 10, 2019 at 5:35 pm #41444
Let me put this another way. There is absolutely no way Harris is going to win the nomination by winning primary votes. Not going to happen. If she ends up with it, then the supers picked her for some damn reason. And it won’t be good
I’m not supporting that.
The less clusterfukery there is involving the winner, the more I’m likely to consider voting for them. It won’t be a blanket thing.
The more they give me something to actually vote for, the more inclined and likely I am to vote for them.
Involve me, my interest in the fight, and I’ll fight. Don’t involve me, or dictate? Fine, they know best and can fight it out themselves.April 10, 2019 at 5:44 pm #41445
So you’re okay with Trump winning. Got it.April 10, 2019 at 5:47 pm #41446
Not at all.
However, depending upon clusterfuckery, we may deserve him.
All comes down to priorities. Should we want to make it about everyone, there’s a really great chance we will win and good things will happen.
If we’re not going to make it about everyone, we deserve to lose.April 10, 2019 at 5:48 pm #41447
We never been a democracy. We are a republic. Always have been.April 10, 2019 at 5:51 pm #41448
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