THINGS WERE DIFFERENT. CAN THEY BE AGAIN?
NOT IF WE DON'T CHANGE OUR ECONOMIC POLICIES
It occurs to me that the majority of America’s 320 million people have only lived during what I’ll call the “smash and grab” period of Free Market Capitalism, you know, the one where the working and middle classes have been basically tossed to the curb of history without a second glance by our pointy headed economist elite class and our political ruling elite class. It’s what propelled a television reality show developer, big mouthed failed business tycoon to the Presidency. Now if I were a cynical person, I might think that the economists who designed our current system that destroyed the lower classes and made a small group of folks insanely rich did so on purpose or maybe out of spite. After all, most - if not all of them - are graduates of Harvard, Yale, Princeton, MIT and in this case, the University of Chicago and, therefore, have designed an economic system that greatly benefits themselves.
But since I’m not a cynical person (at least not most of the time) I’ll conclude that the destruction of America’s working and middle classes, the loss of the American Dream, the Crash of 2008, the unprecedented control of big business over every aspect of our lives is simply the result of unintended consequences (although I’m thinking collateral damage is the more appropriate term) from stripping away every protection from the excesses of capitalist greed and free market chicanery was unintended. I’m giving the Chicago School Economists – Milton Friedman and Alan Greenspan – the benefit of the doubt here.
Prior to 1980 when the Free Market Capitalistic Economic theories of the aforementioned Chicago School/Friedman/Greenspan cabal began to take hold – they had originated in academia since prior to World War II – and public policy began reflecting the newly resplendent Unfettered Free Market Capitalism that would usher in a golden economic age of unending prosperity, the predominant economic theory was Keynesian Economics named for John Maynard Keynes one of the giants of economics history. This economic theory posited that government intervention was necessary to prevent and mitigate the excessive upturns and downturns in economic cycles that capitalism was prone to experience. This was accomplished through monetary and fiscal policy as well as regulatory actions. It was under Keynesian interventionist policy that Europe was rebuilt after World War II. (Wikipedia has a decent piece on Keynes: https://en.wikipedia.org/wiki/John_Maynard_Keynes ) It was a resounding success.
But by the 1970’s Keynesian Economics had fallen into disfavor and by 1980 America was well on its way down the path of so-called “neo-liberal” economics which is nothing more than old fashioned Unfettered Free Market Capitalism given freer rein. From this time on public policy has resulted in the destruction of unions, the adoption of right to work laws, tax policies beneficial to the rich and detrimental to the rest of us, unfailing favoritism to corporate interests over the interests of the public, the loss of trust in government, and a host of other negative impacts on American society. Ultimately the new but old “neo-liberalism” resulted in the spectacular world wide Crash of 2008 which was caused directly by the lack of oversight and regulation of Wall Street to mitigate capitalism's fundamental penchant for greed at all costs. As Greenspan had announced a decade before: “The Markets Are Self-Regulating.” Right. So much for Free Market Capitalistic theory.
I have a daughter who was born in 1980, the pivotal year in the switch from Keynesian Economics to Neo-Liberal economics (as it is called) and she has lived under no other economic system than the clawing, blood lust, Game of Thrones style economic system we are still subjected to. For her, she has experienced no other option. But I have. And it’s not that life under a Keynesian driven economy was nirvana or paradise on earth. No. But it was different. Here’s how.
Putting aside for the moment the profound worldwide changes that have taken place since World War II and 1980 for that matter, my father’s story illustrates how beneficial to working and middle class folks was pre-1980 economics as opposed to post 1980 economics. Forced to leave high school at the age of 16 to go to work due to the death of his father (this would have been in the late 1920’s) he began as a carpenter’s helper. After several years he became a plumber’s helper and eventually he got a job with the Eastman Kodak Company and stayed there until he retired in 1965. By the time I came along, we had a three bedroom home in suburban Rochester, NY on four acres of land, bought a new car every two years, took month long summer vacations, my father got an annual bonus from Kodak, company contributions to a pension, and would you believe even stock options. I mean not all that shabby for a man who never finished high school.
This was during a time when the so-called American Dream – working hard to boost yourself up the ladder of working and middle class success – actually worked. It no longer does. I don’t use this as an example of how great and wonderful life was back in the 1950’s and 1960’s but as an example of how economic theory and economic policy impacts people’s lives. Yes, those old arrangements – that sacrosanct contract between employer and employee – are gone and are not coming back. But then you have to ask yourself why is it and what is the social benefit of CEO’s who made on average 40 times their basic working stiff back when I was growing up in the 60’s and my father was working at Kodak compared to today’s CEO who make 400 times the money of his worker? Or what is the reason why college costs so much more in relative terms and students are saddled with enormous debt than I was and were my peers back in the 1960’s and 1970’s?
These “anomalies” do not happen by accident. The World Wide Crash of 2008 was the result of the attitude that “Government isn’t the solution; government is the problem” where government regulation is deemed to inhibit economic activity. This was one of Ronald Reagan’s foremost mantra’s when he was elected in 1980 and has continued to be a strong public attitude over thirty years later and a public sentiment that profoundly influences public policy today. But it wasn’t always so. John Kennedy was a firm believer in the honor of pubic – government – service. He urged us to take up a career in government to improve the lot of America’s citizens. Just a few years later Reagan’s anti-government slogan became the de-facto law of the land. There was a time, not so long ago, when state university systems offered cheap tuition and excellent higher education because they were supported by state tax dollars which was seen as a good thing since a highly educated public benefited the entire society. But no more. There is no longer any value placed on what used to be called “a public good,” i.e. benefits not necessarily accruing to every individual but improving the overall welfare and well being of society.
Back in the day, it would have been inconceivable that when a company made a bad product that injured or killed people, you couldn’t sue them. Today Congress and the court system has made it much more difficult to take legal action against corporations. Used to be that the Justice Department actually forced monopolistic companies to be broken up. Can you imagine such an event taking place today? Breaking up a company? No way. Wages have been stagnant since 1980 and this too is no accident. It’s what corporations want. It’s what Congress and state legislators have instituted by adopting laws favorable to corporations but unfavorable to the rest of us. And think about the chances for anyone without a high school diploma actually working their way into the middle class. It is impossible today.
All because of an economic theory – and trust me, all economics is theory and NOT science – America has been through three decades of diminished expectations, diminished futures, diminished prosperity, and diminished outcomes for most Americans. Sure, the rich have had it made for thirty years but not the rest of us. None of this happened by accident. It happened because of economic policy – spending priorities, tax policies, corporate favoritism, laws, rules and regulations – and not some mysterious, mystical force working behind the scenes in secret.
Yes, there was a time when working and middle class families could climb the ladder of success and achieve the American Dream. Can it happen again? Yes, it can. But it's not going to happen by itself. It will only happen if we, the rest of us, force it to happen. Bernie Sanders got it right. Republicans got it wrong.
Trump will change none of this. In fact, he along with Speaker Paul Ryan (R-WI) and the Republican controlled Congress are likely to make it far worse now that they have no check on their power. For years Ryan has wanted to gut Social Security, Medicare and Medicare and Republicans have wanted to repeal Obamacare since it was adopted and now they have their chance.
God Help Us All Because These Fools Will Not.