Nobel laureate economist Joseph Stiglitz is not a fan of neoliberalism.
Three years ago, President Donald Trump’s election and the United Kingdom’s Brexit referendum confirmed what those of us who have long studied income statistics already knew: in most advanced countries, the market economy has been failing large swaths of society.
Nowhere is this truer than in the United States. Long regarded as a poster child for the promise of free-market individualism, America today has higher inequality and less upward social mobility than most other developed countries.
After rising for a century, average life expectancy in the U.S. is now declining. And for those in the bottom 90% of the income distribution, real (inflation-adjusted) wages have stagnated: the income of a typical male worker today is around where it was 40 years ago.
Meanwhile, many European countries have sought to emulate America, and those that succeeded, particularly the U.K., are now suffering similar political and social consequences.
The recent European elections do not give me hope that Europeans are learning from our mistakes, although Josh Marshall argues it’s not as bad as it looks. But let’s go on …
Urban Americans who have profited from globalism are still oblivious to what Reaganomics and its cousin, neoliberaism, have done to large parts of the country. Indeed, I still run into people who insist neoliberalism isn’t even a real thing. They should hang out with me for a while.
The New York Times has one of those “reports from Trump’s America” articles focusing on one laid-off auto plant worker adjusting to life without a job. I found the article compelling, because I know this guy. Not the individual in the article, but his many counterparts. I went to high school with this guy. I run into him at family reunions and funerals. He comes around to mow the lawn and fix the plumbing.
The local variation of this guy is somewhat different in that he may never have had the union job his father had, since the union jobs moved out of here in the 1980s and not just last year. But he knows he doesn’t have the same range of opportunities that his father did. He’s able to maintain a middle-class standard of living by cobbling together more than one job, and his wife works, too, but they do without much of a benefit package. On paper, it may look as if he’s doing all right, but he worries about retirement. HIs dad had a pension and benefits; this guy doesn’t.
This guy blames NAFTA, and both parties, for the loss of union manufacturing jobs that have changed his economic reality. This guy voted for Donald Trump in 2016, big time, but he realizes now that Trump hasn’t actually done anything and probably won’t. He says he’s open to supporting any candidate, of any party, gender, or race, who can give him his old life back, or something similar.
And here’s the part where it’s important for Democrats to talk to this guy, and listen to this guy. In 2016 Clinton didn’t reach this guy, and Trump did, and that’s why he’s president and she isn’t.
Back to Stiglitz:
We can thank former President Ronald Reagan and former British Prime Minister Margaret Thatcher for our current state of affairs. The neoliberal reforms of the 1980s were based on the idea that unfettered markets would bring shared prosperity through a mystical trickle-down process.
We were told that lowering tax rates on the rich, financialization, and globalization would result in higher standards of living for everybody. Instead, the U.S. growth rate fell to around two-thirds of its level in the post-war era — a period of tight financial regulations and a top marginal tax rate consistently above 70% — and a greater share of the wealth and income from this limited growth was funneled to the top 1%.
Instead of the promised prosperity, we got deindustrialization, polarization, and a shrinking middle class. Unless we change the script, these patterns will continue — or worsen.
This is a big deal, and it’s not going to be solved by tweaks to the existing system. The system needs a radical overhaul. And, frankly, I think a big chunk of white guy America is ready to consider a radical overhaul in ways they were not in 1972 or 1980 or 1993 or 2000, and Democrats who still insist on running to the center need to adjust. The center, even assuming there is one, ain’t gonna hold.
I don’t know who Umair Haque is, but he wrote an interesting essay —
Now, at this point, sometimes, Americans interject?—?“our society’s not collapsing!” Sorry, yes it is. Longevity’s falling, incomes are shrinking, happiness is plummeting, suicides are skyrocketing. These mega trends aren’t true anywhere else in the world, apart from maybe North Korea. Then there are the other trends, the sociocultural ones, the weird and gruesome ones?—?school shootings, murder-suicide epidemics among the elderly, old people working at Walmart. I read the other day that 20% of American kids don’t drink water at least once a day. What the? You get the point. America is as close a thing to a collapsing society as a rich country has ever been in human history.
(And yet the truth is that nobody forced that fate on America. American collapse is a self-inflicted tragedy. The Soviets didn’t do it. A bullet didn’t need to be fired. It’s a thing made of capitalism, of supremacy, of patriarchy. Supremacy made Americans?—?enough of them?—?say: “I won’t pay for their schools and hospitals! Those dirty, filthy people are beneath me! Why, they used to be my grandparents’ slaves!” Capitalism made Americans believe that everything could be solved with greed, selfishness, markets, and corporations. And patriarchy made it impossible for anyone but pedigreed white dudes who repeated all the above, ad nauseam, the old refrains of “self-reliance” and “individual responsibility” and “free markets” and so on, to get any kind of attention or influence whatsoever.)
The fact?—?and you’re not going to like this?—?is that while the rest of the rich world, notably Europe, modernized, America never did. It never went anywhere?—?and so today, it’s going backwards, having reached the limits of its old paradigms and attitudes of capitalism, supremacy, and patriarchy.
So here we are, in the allegedly Richest Country in the World, and our infrastructure is crumbling from neglect, our maternal and infant mortality rates get worse and worse, school children go hungry if they don’t have lunch money, the water in many areas isn’t fit to drink, many cities have extreme housing shortages, people die because insulin is too expensive, etc. Our state legislatures can’t bring themselves to address these problems but trip all over themselves rushing to ban abortions and loosen restrictions on firearms. And the federal government is completely frozen because the party that controls the Senate functions only to protect the corrupt president. Brilliant.
Oh, and, in the meantime, our planet is dying.
I am paying no attention to polls until after we’ve had a couple of debates. And I am hoping — possibly foolishly — that major news media will have learned a lesson from 2016 and will bleeping report on the candidates, backgrounds and all, and not just cover politics as a horse race.
And I suspect this guy will listen to a candidate who says that we can’t force GM to re-open its auto plant, but we are hiring crews to fix infrastructure, and we pay good wages and benefits. And we’ll see to it your daughter with cerebral palsy can get the health care and services she needs. We can tax rich people to pay for it.
Why is that so hard?
"In 2016 Clinton didn’t reach this guy, and Trump did, and that’s why he’s president and she isn’t."
You can carve that in stone and put the monument anywhere Trump won. Things haven't improved in the states Trump carried. He will run on resentment – it's still strong. The Democrat has to run on real change, not hope and false promises,
One overlooked fact of the Reagan Revolution: changing marginal tax rates changed the costs to the employer of salary and benefits. When the top tax rate is 66%, the cost to an employer of salary and benefits is 34% of the total – if the employer didn't pay it in salary or benefits, they'd only get about a third of the money, after taxes. When the top tax rate is 33%, those things cost the employer twice as much (because now they could take home *two thirds* after taxes).
That also makes a big score a better deal than an ongoing business – hence, mergers and acquisitions.
How do you make a big score? Many companies have places with plenty of cash flow, so figure out a way to cut dollars (note!), regardless of whether or not you cut costs, and hoover up the bucks. In other words, find a place where you can squeeze dollars out of a business.
Now: that means, if a company has a shipping department, that might mean "so we have a private firm doing our deliveries now, for fewer dollars, which makes the stock price higher, so now the company can pay us a big chunk of those dollar savings."
Why do I keep saying "dollars"? Because the costs haven't changed! We're still shipping the same product, the same way, but for a lower price, which means former, better paying trucking jobs are now gone, and lower wage, fewer benefit trucking jobs replace them. Now, the company is getting more cash, by transferring the costs to the workers.
This is a sort of tragedy-of-the-commons thing. If it's done, by a few companies, a little bit, then it usually ends up reducing costs – *someone* figures out how to provide shipping services with lower costs (maybe new trucks with higher fuel efficiency, and computerized travel algorithms), to win all of this out-sourcing contests, and that person has to offer good wages to get all the truck drivers needed to handle those contracts. But it's been done by *everyone*, *everywhere*, and that means that the working class is bled so dry that words like "turnip" and "stone" are appropriate.
Key part: in the big cities, there are still valued, hard-to-replace workers. It's far easier to be a callous twit if you're in a comfy job that pays well.
I do agree that this is one mistake Clinton made. She should have said "I know a lot of you are saying that Trump is promising jobs; he's also promised to make Mexico pay billions of dollars to build an unneeded wall, which they won't do, and everyone knows it. So why trust his first promise, when his second is spoken just as loudly, and with just as big a smirk?"
(In retrospect, that not only would have shored up the "you can't trust the guy", while attacking his biggest point of appeal; it would have been a fine wedge to have available right about now. "We did warn you….")
This is exactly right. I worked for Peat, Marwick, Mitchell (then one of the Big Eight international auditing firms) in the '60s and well remember our consulting division explaining to customers that buying (investing in) new equipment only cost them half of sticker price, because the corporate tax at that time was 50%. I still have trouble wrapping my head around that, but when I think it through it makes sense. There's a thing called "depreciation," so every year a part of the purchase price is written off as an expense, which reduces your tax. Eventually (and they changed the rules to speed up the rate at which you could write off the full price) you charged the whole purchase as an expense and your tax liability was reduced by half that, the same as if you paid the full tax and the government gave you half of it back.
That's it: I've been telling that to folks claiming that "tax cuts create jobs" for years.
Not everyone agrees with Josh Marshall:
"Once the world’s bastion of liberal, democratic values, Europe is now having to confront demons it thought it had laid to rest. The old pathologies of anti-Semitism, populist nationalism, and territorial aggression are threatening to tear the European postwar consensus apart." – The End of Europe: Dictators, Demagogues, and the Coming Dark Age by James Kirchick:
https://www.amazon.com/End-Europe-Dictators-Demagogues-Coming/dp/0300218311
Reagan and Thatcher were only two proponents of radically individualistic economics intended to counter collectivism of any kind. Similar thinking has existed in the US at least since the Whiskey Rebellion during Washington's administration. From Wikipedia:
"The economist John Kenneth Galbraith noted that "trickle-down economics" had been tried before in the United States in the 1890s under the name "horse and sparrow theory", writing:
Mr. David Stockman has said that supply-side economics was merely a cover for the trickle-down approach to economic policy – what an older and less elegant generation called the horse-and-sparrow theory: 'If you feed the horse enough oats, some will pass through to the road for the sparrows.'"
The phrase "trickle down" seems little improvement on the horse and sparrow imagery.
One of today's manifestations of laissez-faire capitalism is the philosophy of Objectivism, which was developed by Ayn Rand. Alan Greenspan, Chairman of the Federal Reserve from 1987 to 2006, was part of her inner circle. Former House Speaker Paul Ryan idolizes her and gives copies of her book 'Atlas Shrugged' as Christmas presents. Objectivism rationalizes utter selfishness:
https://en.wikipedia.org/wiki/Ayn_Rand
Regarding your ending rhetorical question, progress is always harder than standing still or moving backward, if for no other reason than it's always accompanied by unknown risks.
Umair Hague was new to me, but that just shows how out of the loop one gets. From you-tube, to Ted talks, to a book, and the referenced essay his message attempts are hard to miss. Economically a capitalist, he posits a change from the economics of decadence based capitalism to a more sustainable form of capitalism. His concept of weak value I really liked, which I translate to a company which capitalizes it's assets an socializes its liabilities. In my world like some alleged coal mining companies. Leaving a trail of environmental damage, black lung disease, mine disasters, and profits that cannot be clawed back. That would be a company with weak value as I understand it.
Thanks for the heads up on a young, cogent, economist with what seems a solid message.
You can't expect people to hear the calm voices of logic and reason whILE tRUMP, Russia, Fox, Rush, etc… are screaming lies and propaganda at the top of their LUNGS!
"By the time 'truth' puts its boots on, a lie is half-way 'round the world."
The woman at amash town hall who said "I didn't know there was anything bad mueller report". People don't read.
They don't see the big picture and they can't decipher propaganda.
They bought the "business will solve everything, government is scapegoat" bs since 1980.
The deck is stacked.