The 21st Century Political Crash

The grand crash between liberalism and conservatism today is not about what it used to be, about balance, about avoiding extremes. Many of the Republican platform planks from fifty years ago would fit neatly in any Democratic platform today. Now it is entirely about who gets the money. For Republicans that means the rich. All others are judged lazy “takers”.

Conservative capitalists hold all the cards, having purchased the deck. Not only have the very rich taken virtually all of the financial profit of the past half century for themselves, they have literally purchased governmental favor by spending enormous sums on lobbying, buying pet legislators with re-election money, and cultivating political influence by various unsavory means such as the ALEC organization and various varieties of pay-for-access to legislators.

It’s all about who gets the money.
Do we have a democracy—
or a plutocracy?

There is nothing even remotely like this power in the liberal camp, particularly for the poor, who are largely voiceless and invisible in the halls of government.

Most of us non-rich aren’t even interested in hoarding wealth. We are interested in justice and equality. This puts us at a distinct disadvantage because wealth buys what it wants, which is not justice and equality. In fact, it precludes justice and equality. This gross imbalance has resulted in laws, regulations, and favors that fulfill the wish list of the very rich, guaranteeing them ever-increasing wealth, which is paid for by the rest of us.

The post-WWII decades seemed like the end of this imbalance. Instead, as we learned from Thomas Piketty, we have returned to an earlier norm of gross inequality and power to the very rich. Our inequality, as measured by the Gini Index, is sandwiched among Bulgaria, Uruguay, Philippines, and Cameroon, far away from where we should be, and is worsening all the time.

As shown by Piketty’s Capitalism In the Twenty-first Century, stacking the deck has created inequality as bad as the Gilded Age, when plutocrats gave extravagant parties of disgusting excess for hundreds, featuring such things as bars of gold or diamonds for party favors, while the poor literally didn’t have enough to eat. In the long run, it’s a problematic game for the rich to be playing, as Marie Antoinette might advise.

Stacking the deck
has created an inequality
worse than that
of the Gilded Age.

During the post-WWII years strong labor unions that had helped bring war victory were able to demand good wages. This resulted in wealthier buyers for American products, thus benefiting capitalists as well. The economy was the healthiest it’s ever been. Since the Reagan era, conservatives have demonized labor and low-income people, and through a long campaign have basically killed the “damned unions” they hated in spite of the soaring economy they brought.

At this point conservatives are just beginning to understand once again that their wish list destroys the buyer base under which capitalism thrives. The subjugation and lost power of labor and the resulting worsening income of nearly everyone have led to an unhealthy quasi-democracy where gross inequality constantly increases in parallel with the power and hoarded wealth of the very rich.

The wages of the lowest earners are scandalously skimpy, especially for the richest nation in history. Not only has the minimum wage been eroded to half by inflation, but it was never close to an adequate living wage to begin with. Yet millions do depend on their low-wage job for their entire family income, because they have no other choice. The resulting corrosive poverty is bad for us all, because it costs the rest of us for welfare support, worsens social ills such as poor health, erodes the value of education, and weakens the nation. Recent striving for a $15 minimum wage is an improvement, but isn’t close to the Living Wage enjoyed by so many other countries.

Better prevention of capitalist
wealth extraction is crucial,
or democracy is doomed.

The other part of the unsolved problem is how to balance healthy capitalist initiative that actually does accomplish some good against the limitless greed that accompanies capitalism and worsens everything. It’s not an easy problem. Clearly, as inequality continues its malevolent rise, better prevention of unearned capitalist wealth extraction and rent seeking is crucial if we are to retain our claim to being a democracy. Inequality does nothing good for the nation.

Piketty warned that there were no complete solutions. He suggested that a very modest annual wealth tax may be a partial answer.

In my opinion, removing the numerous artificial loopholes so that all income is taxed will surely help. The very wealthy get most of their income from capital gains, which is taxed at just over half of the rate for ordinary income, whereas most of us are taxed at a higher rate. Much wealth rests in unreported offshore accounts, and there are numerous obscure financial quirks arranged by the rich to funnel more money to themselves. Every little bit harms, after all. It’s worth repeating that all this wealth is useless to its owners, except as bragging rights. They cannot possibly spend it, and their investments don’t really benefit the country.

Most outrageously, some of the richest corporations pay no US tax at all, and most don’t pay anywhere near their share, which means the rest of us must pick up the slack. Many use various schemes to pretend they don’t owe any, such as moving their nominal headquarters to a low-tax country, or hiding their billions with fancy bookkeeping. They should pay a duty, or be taxed, to sell their goods in a “foreign” country.

Hedge funds, fast trading, and stock market derivatives, all of whose social utility is zero, ought to be simply outlawed. The fact that you can manipulate other people’s money doesn’t make it moral, let alone of any value to society. Investment in offshore banks that don’t report their holdings to the US government should be outlawed, period. Banks should be reorganized in order to separate banking from investment, with government bailout of investment banks specifically forbidden.

Rich capitalists will fight all of these tooth and nail, and they own Congress.

Further possibilities could include mechanisms that reward the wealthy for using their money in socially beneficial ways. Individuals might receive a special tax favor for non-controlling investments in benefit corporations, non-polluting renewable energy, education for the poor, or so-called social funds whose goals are to improve society. Or simply pay for needed national infrastructure upkeep, which at present is in an advanced state of decay from decades of deferred maintenance. Incentives might be devised for money that is withdrawn from certain foreign banks and returned to domestic banks.

Whatever comes of it, we need a rearrangement of priorities so that the poor are not trapped in eternal hopelessness while the super rich build their personal Versailles from which to look down on the rest of us as they destroy the Earth beneath their feet.

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  1. Reblogged this on Citizens, not serfs.

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