He is the closest thing to a "centrist" we have today. Everyone else is well to his right - including Pres. Obama.
read this and tell me you disagree with his logic.
---------------------------------------------------------------------------------------------------
Sunday, May 6, 2012
Francois Hollande’s
victory doesn’t and shouldn’t mean a movement toward socialism in Europe
or elsewhere. Socialism isn’t the answer to the basic problem haunting
all rich nations.
The answer is to reform capitalism. The world’s
productivity revolution is outpacing the political will of rich
societies to fairly distribute its benefits. The result is widening
inequality coupled with slow growth and stubbornly high unemployment.
In the United States, almost all the gains from
productivity growth have been going to the top 1 percent, and the
percent of the working-age population with jobs is now lower than it’s
been in more than thirty years (before the vast majority of women moved
into paid work).
Inequality is also growing in Europe, along with
chronic joblessness. Europe is finding it can no longer afford generous
safety nets to catch everyone who has fallen out of the working economy.
Consumers in China are gaining ground but
consumption continues to shrink as a share of China’s increasingly
productive economy, while inequality in China is soaring. China’s
wealthy elites are emulating the most conspicuous consumption of the
rich in the West.
At the heart of the productivity revolution are the
computers, software, and the Internet that have found their way into
the production of almost everything a modern economy creates. Factory
workers are being replaced by computerized machine tools and robotics;
office workers, by software applications; professionals, by ever more
specialized apps; communications and transportation workers, by the
Internet.
Some work continues to be outsourced abroad to very
low-wage workers in developing nations but this is not the major cause
of the present trend. This work now comprises such a tiny fraction of
the costs of production that it’s becoming cheaper for companies to do
more of it at home with computers and software, and even bring back some
of it (“in-source”) from abroad.
Consumers in rich nations are reaping some of the
benefits of the productivity revolution in the form of lower prices or
more value for the money – consider the cost of color TVs, international
phone calls, or cross-country flights compared to what they were
before.
But most of the gains are going to the shareholders
who own the companies, and to the relatively small number of very
talented (or very lucky and well-connected) managers, engineers,
designers, and legal or financial specialists on whom the companies
depend for strategic decisions about what to produce and how.
Increasingly, via stock options and bonuses, the
owners and the “talent” are one and the same. While many other people
indirectly own shares of stock through their pensions and 401-K plans,
90 percent of the value of all financial assets in the U.S. belongs to
the richest 10 percent of the American population.
Meanwhile, a large number of low-paid service
workers sell personalized comfort and attention – something software
can’t do — in the retail, restaurant, hotel, and hospital sectors (most
U.S. job growth since 2009 has occurred here.) Others – temps, contract
workers, the under- and partially-employed, fill in where they can. A
growing number are not working.
The problem is not that the productivity revolution
has caused unemployment or under-employment. The problem is its fruits
haven’t been widely shared. Less work isn’t a bad thing. Most people
prefer leisure. A productivity revolution such as we are experiencing
should enable people to spend less time at work and have more time to do
whatever they’d rather do.
The problem comes in the distribution of the
benefits of the productivity revolution. A large portion of the
population no longer earns the money it needs to live nearly as well as
the productivity revolution would otherwise allow. It can’t afford the
“leisure” its now experiencing involuntarily.
Not only is this a problem for them; it’s also a
problem for the overall economy. It means that a growing portion of the
population lacks the purchasing power to keep the economy going. In the
United States, consumers account for 70 percent of economic activity. If
they as a whole cannot afford to buy all the goods and services the
productivity revolution is generating, the economy becomes stymied.
Growth is anemic; unemployment remains high.
That’s why “supply-side” tax cuts for corporations
and the wealthy are perverse. Corporations and the rich don’t need more
tax cuts; they’re swimming in money as it is. The reason they don’t
invest in additional productive capacity and hire more people is they
don’t see a sufficient market for the added goods and services, which
means an inadequate return on such investment.
But more Keynesian stimulus won’t help solve the
more fundamental problem. Although added government spending has gone
some way toward filling the gap in demand caused by consumers whose jobs
and incomes are disappearing, it can’t be a permanent solution. Even if
the wealthy paid their fair share of taxes, deficits would soon get out
of control. Additional public investments in infrastructure and basic
research and development can make the economy more productive – but more
productivity doesn’t necessarily help if a growing portion of the
population can’t absorb it.
What to do? Learn from our own history.
The last great surge in productivity occurred
between 1870 and 1928, when the technologies of the first industrial
revolution were combined with steam power and electricity, mass produced
in giant companies enjoying vast economies of scale, and supplied and
distributed over a widening system of rails. That ended abruptly in the
Great Crash of 1929, when income and wealth had become so concentrated
at the top (the owners and financiers of these vast combines) that most
people couldn’t pay for all these new products and services without
going deeply and hopelessly into debt – resulting in a bubble that
loudly and inevitably popped.
If that sounds familiar, it should. A similar thing
happened between 1980 and 2007, when productivity revolution of
computers, software, and, eventually, the Internet spawned a new economy
along with great fortunes. (It’s not coincidental that 1928 and 2007
mark the two peaks of income concentration in America over the last
hundred years, in which the top 1 percent raked in over 23 percent of
total income.)
But here’s the big difference. During the
Depression decade of the 1930s, the nation reorganized itself so that
the gains from growth were far more broadly distributed. The National
Labor Relations Act of 1935 recognized unions’ rights to collectively
bargain, and imposed a duty on employers to bargain in good faith. By
the 1950s, a third of all workers in the United States were unionized,
giving them the power to demand some of the gains from growth.
Meanwhile, Social Security, unemployment insurance,
and worker’s compensation spread a broad safety net. The forty-hour
workweek with time-and-a-half for overtime also helped share the work
and spread the gains, as did a minimum wage. In 1965, Medicare and
Medicaid broadened access to health care. And a progressive income tax,
reaching well over 70 percent on the highest incomes, also helped ensure
that the gains were spread fairly.
This time, though, the nation has taken no similar
steps. Quite the contrary: A resurgent right insists on even more tax
breaks for corporations and the rich, massive cuts in public spending
that will destroy what’s left of our safety nets, including Social
Security and Medicare and Medicaid, fewer rights for organized labor,
more deregulation of labor markets, and a lower (or no) minimum wage.
This is, quite simply, nuts.
And this is why a second Obama administration,
should there be one, must focus its attention on more broadly
distributing the gains from growth. This doesn’t mean “redistributing”
from rich to poor, as in a zero-sum game. It doesn’t mean socialism. The
rich will do far better with a smaller share of a robust, growing
economy than they’re doing with a large share of an economy that’s
barely moving forward.
This will require real tax reform – not just a
“Buffet” minimal tax but substantially higher marginal rates and more
brackets at the top, with a capital gains rate matching the income-tax
rate. It also means a larger Earned Income Tax Credit, whose benefits
extend high into the middle class. That will enable many Americans to
move to a 35-hour workweek without losing ground – thereby making room
for more jobs.
It means Medicare for all rather than an absurdly-costly system that relies on private for-profit insurers and providers.
It will require limiting executive salaries and
empowering workers to get a larger share of corporate profits. The
Employee Free Choice Act should be an explicit part of the second-term
agenda.
It will require strict limits on the voracious,
irresponsible behavior of Wall Street, from which we’ve all suffered.
The Glass-Steagall Act must be resurrected (the so-called Volcker Rule
is more ridden with holes than cheese), and the big banks broken up.
And it will necessitate a public educational system
– including early child education – second to none, and available to
all our young people.
We don’t need socialism. We need a capitalism that
works for the vast majority. The productivity revolution should be
making our lives better — not poorer and more insecure. And it will do
that when we have the political will to spread its benefits.
No comments:
Post a Comment