Thursday, October 06, 2011

Pushing The Money Around

by Dick Mac

The failings of modern capitalism are easily masked by consumerism. The more conspicuous the consumerism, the more obvious it appears that capitalism is remarkably successful, rewards only the hard workers, and is the only path to freedom.

Consumerism is a wonderful thing. I like stuff. I like nice stuff. Modesty, and by extension humility, are difficult in a modern capitalist society because not only is modesty not rewarded, it is denigrated. Modesty is weakness, or worse: failure.

Consumerism is the primary product of modern capitalism (and I define modern capitalism as the open-market economic system established during and just after World War II). If the majority of the citizenry is able to consume, then a happy and productive society and workforce will follow. Without this simple part of the economic equation, modern capitalism is a failure.

For the past thirty years, we have embarked on modifying capitalism in a specific way: we have decided that if we push the majority of the wealth up to the top of the economic ladder (that is, give more money to those who already have the most money), that our economy will grow in ways never known to mankind.

Those of us who voted for Ronald Reagan are primarily responsible for the liberalization of the economy, which is promoted by the most conservative Americans.

After the establishment of Reaganomics as our new form of capitalism, however, those of us who voted for Bill Clinton, Geroge W Bush, and Barack Obama have reinforced the decision to follow this path. The only chief executive of the United States who ever spoke against this economic plan was George H.W. Bush, who succeeded Reagan. He knew that this economic policy would destroy our marketplace, our work force, and our financial stability. He spoke out against it, referring to it as "VooDoo Economics."

His attempts to restore some semblance of stability to our nation when he succeeded Reagan was met with derision and rejection by his own peers. He was chased from office, and those who at one time promoted his career (including his son), have left him to his retirement.

Between 1932 and 1979, prior to the advent of Reaganomics, American capitalism was pretty much like capitalism in the rest of the free world (that is, the Western world), with some minor differences. Workers worked hard and were rewarded with the newly-minted lifestyle called "middle class." The middle class did not exist prior to its creation (using federal subsidies) by us as a society. Workers earned a decent salary and the executives who ran the companies earned about twenty or thirty times more than the workers.

If the average pay for a worker in a company was ten thousand dollars a year, the chiefs of the company earned about a quarter of a million dollars.

This economic structure helped promote hard work in the hopes of reaching the chief level, and provided sufficient income for the workers to maintain a middle class lifestyle, including the consumerism that drives the market.

Since the advent of Reaganomics, the tax code and government spending plans that created the middle class have been changed to this new mode of thinking called supply-side economics, the method of pushing the wealth to the top so it trickles down to the rest of the citizenry and creates vast opportunity and more evenly-distributed wealth.

After thirty years of this, we have fewer jobs, more poverty, less money to run and maintain our infrastructure, and a situation where the income disparity between worker and chief has exploded to embarrassing levels.

In modern capitalist societies in the rest of the free world the difference in income between worker and chief continues to average about 25 times. If the average income of the workforce is $50,000, the chiefs are earning about $1.25 million.

This is what would be called "equity" if it were true in America.

In the last thirty years, however, that difference between worker and chief salaries has increased from about 25 times to about 475 times, in the United States.

If the average American worker is earning $50,000 then the average chief is earning about $23.75 million.

This is called disparity, and so-called libertarians and so-called conservatives would tell you that this is the natural force of the markets. This, however, is not remotely true.

All economic systems, just like all societies, are engineered by laws and policies and codes and mores. Just as the United States created a successful and thriving middle class in the mid-20th century (a phenomenon copied by all of our allies), we have spent the past generation re-engineering our economy and society to eliminate the middle class.

Those earning twenty million a year did nothing special to earn it, they performed the same tasks their predecessors performed for a fraction of the earnings. What has happened is that we have re-written laws and codes, policies and mores to ensure that those at the top garner more of the nation's resources than those at the bottom.

I am actually OK with this, I accept it.

What I am not OK with is our society accepting the notion that these people have somehow done this all by themselves, that government intervention and subsidies have had nothing to do with their success, and in order to save America we must not just continue these policies, but we must further subsidize and codify this system because it is the only way to save ourselves.

By continuing this path of corporate anarchy, this policy of "everything done by corporations is good" and "everything done by the government is bad," we are doomed.

Governments subsidize society. That has been true since the beginning of time, and the more civilized the society, the more social engineering is performed by that society's government. This is what has made Western Civilization a success.

If we are choosing to eliminate government from the social engineering part of civilization building, then we should be eliminating from the top down, not from the bottom up.

We have spent thirty years changing laws and policies, codes and mores to prevent those at the bottom of economic ladder from progressing into a stable middle class, and we have promoted the acquisition of wealth only by those at the top of the ladder, those who need these subsidies the least.

That is what supply-side economic theory is about.

There is nothing in the implementation of supply-side economic theory that suggests the rich will earn their fortunes all by themselves with no help from the society around them. What we have done is change the focus of our social engineering from those at the bottom and in the middle to those at the top.

Billionaires don't exist in a vacuum. Their fortunes have been created by participating in a society funded by everyone along the economic spectrum.

Do I think everyone should get the same resources and benefits like some sort of socialist nirvana? No! But we need to stop pretending that those at the top amassed their fortunes all by themselves without the help of government; and we must shift some of our societal focus away from pushing the wealth to the top, and we must return to laws and policies, codes and mores that will re-establish the middle class.

If you think that is socialism, you are wrong. That is what made America great and created the most amazing capitalist society that ever existed. The path we have been on for the last generation is socialism for the rich.

If you oppose socialism, then you oppose everything the GOP and most modern-day Democrats promote, and if you oppose socialism then the policies of the Tea Party should scare you more than anything else.

Socialism for the rich is NOT capitalism, and it is not freedom.