flagrantly unjust and harmful policies for taxes, governmental spending and real
and imagined surpluses in place or on their way had their beginnings in the last
years of Carter’s presidency — prodded and facilitated by what Richard Du Boff
termed "the corporate counter-attack," against unions and decent social
policies. In the ensuing quarter century, governments at all levels have become
dominated by GOP and Democratic conservatives, a domination achieved by a public
effectively taught (in Paul Baran’s memorable phrasing) "to want what they don’t
need, and not to want what they do."
of what we do need from governmental policy was first effected late in the
depression of the 1930s, and both broadened and deepened in the Fifties and
Sixties. The policies were "reformist," not radical; and/but they helped to meet
some deep needs of the people and the economy. That it took a depression, a
world war and a Cold War to make such good sense possible is a severe indictment
of our Right-skewed politics, as is the fact that the West Europeans pursued
such reforms much further, even though it has always been easier for us to do
nature and importance of those policies may be understood by the reminder of
where matters stood in the USA in 1935, as the "second" New Deal began: the USA
had NO unemployment insurance, NO provisions for the old, survivors, or the
disabled, NO laws against child labor, NO minimum wage or maximum hours, NO
Medicare or Medicaid or the social benefits (pensions, paid vacations, health
care) paid wholly or partially by employers, NO environmental laws, NO
subsidization of low-cost housing, NO educational policies to counter the
problems of low-income parents and children — NONE of those (among other)
policies essential to a safe and decent society, and to which we became
accustomed (as we also became politically lazy and socially indifferent: just
what Dr. Capitalism wants).
passes for economic wisdom today is frighteningly reminiscent of the 1920s — as
is, in many ways, the behavior of the economy; then, as now, a "laissez-faire"
set of guiding principles which views governmental intervention for social
wellbeing as it would child molestation — a viewpoint joined in and
propagated/propagandized by the economics profession. As in the 1920s,
mainstream econ believes that if and when the economy moves toward and into
recession, manipulation of interest rates is not just the best but the only
solution: Greenspan, as a follower of Ayn Rand and Milton Friedman, accepts that
as being right and proper, implicitly or explicitly — as do most of those in
Congress, most of whom, after all, came to their "adulthood" in the late 1970s,
as this particular Hell was breaking loose.
general public has reacted to this set of regressive developments with
puzzlement, or acquiescence, or enthusiasm or apathy, in one or another
combination — either forgetting or never knowing that the realities and
economics of the 1920s carried us to socioeconomic disasters almost unimaginable
for today’s all too pervasive smug and greedy mentalities.
this too must be brought back to attention: if the ongoing rightwing juggernaut
is to be halted and reversed now and in the future, what is required is what
made the earlier reforms possible: hard work by those who formed unions, and
political involvement and hard work by a significant portion of the general
make any progress along that path, we must know the whys and wherefores of the
relevant economic analysis and related economic policies. They are not very
complicated; but they involve unlearning as well as learning.
earlier Zcommentary on the "New Economy" I compared the present with the 1920s),
noting both important differences and important similarities, and argued that
serious trouble lay ahead. That commentary may be worth re-reading along with
this one. Its emphasis was on the extraordinary fragility of the U.S. and the
global economy, due to mountains of consumer, business, and foreign debt,
rampant speculation, and pervasive excess productive capacities, problems all
more severe than their 1920s counterparts. There is much debate as to whether or
not the U.S. economy is at the beginning of a recession (something seen as
totally unlikely even a few months ago). Nobody can predict economic futures
with anything like precision; but one can point to probabilities. They are 1)
there will be a recession in the USA soon; 2) in that the U.S. economy is "the
consumer of last resort" for an export-dependent world economy, the recession
here will occur soon afterward "there"; 3) in that this economy is wildly
over-borrowed, and all other economies also heavily debt encumbered, once
trouble begins it is likely to spread and deepen; 4) virtually every government
now takes "free market" and monetarist policies as undebatable; 5) in the near
future, as in the past that began in 1929, it will take years for good sense to
catch up with and replace today’s "common sense." What is that "good sense"?
not monetary policy, which is what the Greenspan and the Fed do: manipulating
the rate of interest (and the supply of money) to stimulate the economy. Its
underlying creed is that the economy never needs more than a little push: hands
off, now and then a tickle — the sort of thing a pilot does with wing flaps, as
distinct from "flying." Such a remedy is effective only when the problem is
minor — good for a cold, but not for the flu, let alone pneumonia.
Duplicative excess productive capacities over the globe mean that too many
factories are producing the same things and trying to sell them to the same
people or places in the face of a broad and deep inadequacy of consumers and
businesses able/willing to buy all that supply at prices that allow profits.
That is the problem whose smoke trails now darken the horizon. It will not be
resolved by "the free market," for that is its cause. Confronting such
structural imbalance between supply and demand with interest cuts — as the
Japanese have been learning for a decade now — is akin to "pushing on a
the face of serious recession (to say nothing of depression) what is not only
economically necessary, but, as well, socially desirable, is to add
governmentally induced demand to private consumer and business demand; that is,
for the government to subsidize what Keynes once called "social consumption" and
"social investment," and to run a budget deficit (increasing expenditures, but
not taxes) to do so. A moment’s reflection reveals that such policies create
jobs and increase incomes and stimulate sales for all businesses and improve the
health of the entire socioeconomy.
U.S. economy has been moving toward surplus budgets in the years of expansion;
now, as we move toward contraction, we should be accumulating deficits: not by
reducing the already too low taxes on the rich, but by leaving them where they
are, while giving a quick rebate to the bottom third of the population and
lowering income taxes for the next 50% or so in some reasonable progression.
specifically (as I argued in a Zcom on Social Security last year), the USA
should cease to be unique in its financing of social security through payroll
deductions, and finance it instead through the general tax fund based on income
taxes. The average family now pays more in payroll deductions than in income
taxes; and those with incomes $72,000 and higher pay zero tax on anything above
that. It is stupid and unjust: the poorer you are in your working years, the
less you receive in retirement; the richer you are, and thus needing nothing,
the more you get. Devilish.
the expenditure side we should be pushing for what is socially necessary and, in
the process, move toward the decommidification of essentials: social
expenditures for housing, education, a single-payer health care system,
environmental projects to save our air, water and soil, and expenditures of all
sorts on our creaking infrastructure (not least, in the realm of public
Sounds good, no? To you and me, yes. But there has been no "sounding" of such
notions now for a full generation; just the opposite, with an ongoing
bamboozlement of the general public "teaching" that what sounds good for us is
bad for the economy (read: big business), and thus, bad for us.
is, once more, that we must exert ourselves to build a politics that will do
what will work for a safe and sane and decent and buoyant socioeconomy. If we
can do that we can then go on to do something better than that: work toward a
new and better system.
in this the richest nation in all of history at its richest point, any
individual or family should be unable to meet fundamental needs is an obscenity
verging on social criminality. That the U.S. public should accept the
ideological ravings of the installed and ascendant Right is shameful. Change for
the better has never depended upon a fulsome majority acting to bring it about,
but on a dedicated minority. That’s who we are, who we could be, who we must be.