The 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.”
Some 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 so.
The 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).
What 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 well-being 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.
The 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.
But 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 public.
. . . . .
To 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.
In an earlier ZNet
commentary 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?
It is 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 delicately does by adjusting trim tabs, 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.
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 and 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 string.”
In 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
The 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.
More 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.
On 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 transportation).
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.
So it 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.
That, 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.