I shall now play the part of a pundit and construct a narrative without providing sufficient supporting evidence. (I'm feeling lazy.)
Once upon a time, the United States of America was a manufacturing powerhouse. (That was how we won WWII.) Now it's just a financial powerhouse, full of hollow shells that design and sell products largely manufactured elsewhere. This happened quite simply because it could. As long as it was cheaper to replace domestic labor with capital investment (automation) and foreign labor (offshoring), any company that failed to do so would be outcompeted and replaced in the market by those that did.
The cost imbalance was partly driven by rising health insurance expenses in a mad system that funneled health care through health insurance through employers, without respect for the necessity of basic health and dental care for human dignity. It was partly driven by developing countries even less worker-friendly than the U.S., with lax labor and environmental regulations that allowed corporations to externalize significant expenses onto the public there without compensation or even accounting. And, it was partly driven by the rise of the U.S. dollar as an international reserve currency, which caused us to have a significant capital account surplus (exporting more financial products), the mirror image of our current account deficit (importing more real products); that made imports artificially cheaper, which likewise made it artificially cheaper for American companies to produce goods elsewhere -- effectively importing their own products -- than to produce them here.
As a side effect of the hollowing out of our manufacturing base, globalization similarly hollowed out the American middle class by replacing well-paying factory jobs with low-paying service jobs. It also caused a dramatic expansion of the income gap, because the profits from more productive capital investment and cheaper foreign labor accrue to those who control the capital -- not to the domestic workers, who were lucky just to not be laid off. During this same long rocky period for regular folks, the top 1% have done very, very well for themselves. Not only have those with great wealth obtained much lower taxes through their control of the media narrative, but they also have such high leverage available through a derivatives-based shadow banking system that while the profits are privatized, the risks are systemic and therefore necessarily socialized.
Since the "haves and have-mores" are the post-Nixon Republican base (as George W. Bush once revealed in a memorable moment of funny-because-it's-true), the Republican party has likewise done very, very well for itself and its DINO pets. Wealthy pluto-cons used a venture capital approach to build up a hydra of think tanks, which they use to push their message into a stenographic media environment, resulting in their aforementioned control of the media narrative, in a nice (for them) little reinforcing feedback loop. As a result, those in the D.C./N.Y. bubble perceive U.S. politics through a dollar-weighted filter. Heard through the babble of think-tank-driven bloviating, a wealthy ten-millionaire's opinion effectively has a thousand times as much weight as a middle-class ten-thousandaire in determining what our politicans and political press see as the "center" of the range of socially-acceptable views.
However, the globalization of financial capital depends on the globalization of real capital, which depends on the price of energy for transport. The globalization grasshoppers long ago succumbed to at least the top two causes of human misjudgment (if not more): misconstrued incentive and denial. They didn't want to believe in natural constraints on the growth of global wealth; so they didn't believe it; so they didn't plan for it, and now here we are.
With the gorging on debt of our borrow & squander conservatives concurrent with the rise of the euro, the U.S. dollar is being reduced to one egg in a basket approach to reserve currencies; and constrained supply is meeting rising demand to push energy prices higher. With the tide flowing out, it is clear that the conservatives have been swimming naked. Instead of following IMF austerity programs (very controversial), nations are literally growing their way out of trouble by giving peasant farmers coupons for fertilizer (very effective). Wealth has financial gravity; like mass, it pulls more to itself, flowing up in a society from those with less wealth to those with more -- not the other way around. The egghead theories that the conservatives use to justify their self-serving policies are simply, plainly, wrong.
We can fix our problems. With a massive public investment in renewable energy, reconstructing the artificial incentives from free trade to fair trade, decoupling health care from the specific employer so that it's only a household and public expense instead of a labor cost per se, restoring the ability of workers to collectively negotiate with the massive pools of collectivized capital that control so many businesses, and of course ending our mutually unwanted occupation of Iraq -- we can fix this. We can build an even better and fairer America than what we had before, designed around a fundamental respect for the personal dignity of every human, recognizing our fundamental interconnectedness with our environment and each other. Let's do it!
Permalink | 21 comments