Katrina venden Heuvel wrote a great Op-Ed in the Washington Post today. It’s short and to the point and highly recommended.
She reviews a new study by the Roosevelt Institute called New Rules for the 21st Century: Corporate Power, Public Power, and the Future of the American Economy. This is an important piece of writing that maps out a new way forward for our economy. It looks beyond the Neoliberal Economics that has dominated the past 40 years to a new future where workers come first.
I recommend the Washington Post article as a starter. The full report by the Roosevelt Institute is 60 pages long, but is very well written and easy to follow.
Failures of Neoliberal economics
The financial crisis of 2008 served as a wake up call for many Americans. Suddenly the rug was pulled out beneath them and their sense of security evaporated along with their life’s savings. As the crisis unfolded people began to notice that the economy was rigged against them. The recovery was slow and 91% of the gains went to the upper 1%. The bankers who caused the crisis went unpunished and worse, they received huge bonuses.
Wages have been essentially flat for decades, and insecurity has risen. Basic investments in infrastructure and research and development have been starved. Wealth and income are ever-more concentrated, increasingly allowing the few the power to subvert our democracy. And the United States is failing basic tests for the future, such as educating the next generation and meeting the existential threat of climate change.
Under Neoliberalism, in addition to getting government out of the way, the rich and powerful captured the government to force it to serve the wealthiest Americans.
This abysmal record isn’t an accident, the report shows. It isn’t because of inexorable forces such as globalization, technology or the “invisible hand" of the market. It is because the rich and the big corporations have organized government power to rig the rules of the economy to benefit themselves. They evangelized market fundamentalism, the illusion that markets are self-correcting and efficiently serve the public interest, while governments are ineffective and wasteful. In reality, the authors conclude, “the free-market revolution was not about getting government out of the way — it was about using government to serve the interests of the elite private sector through fewer government restrictions that inhibit profit and more government intervention that support it.” The Republican right armed that argument with a “strategic racism” that has divided Americans from each other while exacerbating the racial and gender inequalities.
Neoliberal Economics Helped Lead to a Demagogue
Economic insecurity and disillusionment with our government left people cynical and angry. While many events factored in Trump’s election we can’t ignore the overall mood of the country.
In The Price of Inequality, I had worried that if we didn’t respond quickly enough to this growing cancer in our society, a demagogue would arise to take advantage of the discontent. And that was precisely what Donald Trump did. Trump attacked the establishment for ignoring so many who had struggled for so long, even as he pushed policies that would exacerbate their plight, exposing more people to the risk of lack of health insurance, raising taxes on a majority of those in the vast middle class to pay for a tax cut for corporations and billionaires. All the while, he fueled other divides in our society by, for example, blaming immigrants for the country’s travails.
New Rules for the 21st Century
The Roosevelt Institute study maps out a way forward for Democrats beyond Neoliberal Economics. It recognizes “the true source of wealth of a nation is its people”.
To change course will require a new, progressive one-two punch of initiatives that curb the power of big corporations and serve the public interest.
In the first category: progressive taxes, revived antitrust laws, reforms to corporate governance rules to curb chief executive and shareholder excesses, financial regulation, and empowering workers to organize and bargain collectively.
In the second: a modern-day economic bill of rights (Medicare for all, tuition-free college, a higher minimum wage, a jobs guarantee, universal day care, basic banking and Internet access) and investments in our future, such as the Green New Deal and infrastructure spending. (Also called for are democracy reforms — including universal voter registration and curbing big money in politics — to revive the average American’s political power.)
If you have time, check out the full report. I only scratched the surface of great information contained within it.