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IN PART ONE, I gave a description of what I see as the fundamental economic problem facing the United States: namely, the threat to the economy posed by capitalism run amok.

To review: The median wage has been dropping for five years, and even before that the median wage earner had been running in place for 30 years. It is even worse than that, however: Not only has the median wage not budged, but the earnings of the bottom 90 percent of the income scale have not kept pace with the growth of output per worker. Another way of saying that is: The vast majority of the American people are working vastly smarter and harder than they did three decades ago, but their value to the economy hasn’t been reflected in their earnings. At the same time, the profits of American companies have risen steadily, to the point that they are making more now than at any point in history.

The animating economic idea of the American right — that freeing capitalists to make as much money as they possibly can benefits everyone — has been shown by experience to be naïve, or perhaps even malign, nonsense (see the preceding paragraph). It has turned out that 30 years of “freeing capitalists to make as much money as possible” has resulted in obscenely enriched capitalists, and a stagnant-or-worse everyone else. As I’ve said before in this space, this is actually a structural flaw of capitalism. It tends to concentrate wealth, and thus power, in fewer and fewer hands at the top of the heap — as I pointed out in part one, there’s a reason it is called capitalism, and not laborism.

The options are: 1. Do nothing (result: a Dickensian nightmare for workers, and an approving Ayn Rand wanly smiling up from Hades); 2. Completely overthrow capitalism (result: long, boring Brezhnev speeches from the 1970s and mile-long lines for toilet paper); or, something between these two extremes, namely the enactment of policies whose purpose is to correct the imbalances inherent to market economies.

I think it’s time to try something different. Instead of structuring things more or less exclusively in favor of capital, we need to tip the scales back in favor of, well, everyone else. This would not only benefit everyone else, but in the long run it actually makes capitalists themselves better off, because they get a smaller share of a much bigger and more quickly growing economy.

What would this mean, in terms of practical proposals?

Labor Policy: One way to increase the bargaining power of labor is to explicitly encourage, in every industry, unionization of the American labor force. It is worth remembering that organized labor fought for and won most of the things that most people now take for granted as features of a middle-class life: health and pension benefits, the 40-hour work week, the weekend, paid vacation and sick leave, disability insurance, and so on.

Congress passing the Employee Free Choice Act would be a huge lift to labor; they might also consider providing tax incentives and other enticements to companies that allow their non-management staff to organize.

Education Policy: As tax-supported free and low-cost public higher education has been cut and de-funded, student loan debt has skyrocketed, mostly to the benefit of capital in the form of the banks that own that debt.

In the 1950s, my mother went to UC-Berkeley to get her teaching credential. Cal was then, as it still is, one of the top universities in the country, but it cost her exactly nothing — and not because she had a scholarship or fee waiver, but because UC-Berkeley didn’t charge any money to the students who went there. No tuition, free books, no lab fees, and so on.

This was a result of an understanding back then that education benefits society as a whole, and as a social good it ought to paid for by society at large. This is just as true today as it was then — for example, suppose medical education were paid for by tax dollars, so that if you’ve got the smarts and drive to go to medical school and become a doctor, we as a society will pay for your education and training, since we will benefit from your skills when you’re done. You graduating without a six-figure student loan debt means you are more likely to choose the kind of medical practice that best suits your abilities and aptitudes, rather than the one that promises the biggest paychecks when your training is completed. Everyone wins.

Public Works and Infrastructure: To be blunt, the armature of our civilization — our roads, bridges, the passenger rail system, levees and canals, and so on — has been neglected to the point that bridges are literally falling into rivers and flood control engineers are trying not to think about the possible results of the next big storm. I think it’s long past time that we as a society did something about that.

We have an historic opportunity here to kill several birds with one stone: We have a large pool of idle labor, historically low interest rates (to the point that government can borrow money essentially for free), and a manifest need to repair and replace an enormous amount of infrastructure. So why not begin a multi-year plan to accomplish this important work, financed by borrowing plus higher taxes toward the top of the income ladder? After all, capital benefits hugely from having good roads and bridges on which to transport their goods, so it’s only fair that they pay a little more for that benefit.

For that matter, every one of my proposals would benefit capital, since it would result in a healthier economy. Better-paid labor means more demand for the goods the owners produce, as Henry Ford realized back in 1914 when he decided to pay his workers twice the going rate, figuring he could sell more cars if his workers could afford to buy them. A better-educated workforce is more productive than a poorly educated one.

Originally posted to mftalbot on Sun Aug 25, 2013 at 05:08 AM PDT.

Also republished by In Support of Labor and Unions.

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Comment Preferences

  •  Tip Jar (5+ / 0-)

    The whole problem with the world is that fools and fanatics are always so certain of themselves, but wiser people so full of doubts. -Bertrand Russell

    by mftalbot on Sun Aug 25, 2013 at 05:08:11 AM PDT

  •  we need to convince a bunch of our countrymen (1+ / 0-)
    Recommended by:

    The 1% have been fighting for decades to claw back what they were forced to pay for the social good and they have entirely too many citizens who are fine with that because they think it's to their benefit. Recently, though, people who make good enough money that they feel they're immune to the effects of the conservative agenda - I think of them as the "I've got mines" - the solid to upper middle class, are beginning to awaken to the realities as the execs at their companies, in their need to triple their salaries, "right size" their long time co-workers out of their jobs. Maybe they'll get with the program when they feel the interests of capital breathing down their necks. We can hope.

    when I see a republican on tv, I always think of Monty Python: "Shut your festering gob you tit! Your type makes me puke!"

    by bunsk on Sun Aug 25, 2013 at 09:12:55 AM PDT

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