Everything You Need to Know About the New EconomyThe biggest economic
story of our times isn’t about supply and demand. It’s about institutions
and politics. It’s about power.
The median annual
earnings of full-time wage and salaried workers in 1979,in nowadays’s dollars,
was $43680. The median earnings in 2018 was $45708. whether between 1979 and 2018, or the American economy
almost tripled in size,so where did the
gains move? Most went to the top.
Now this is broadly
known, but there is less certainty about why.1. The
Conventional View Conventional wisdom
attributes the widening economic divide to globalization and technological
change – the “inevitable” result of the invisible hand of the so-called “free
market.” Simply set aside, and as the American economy
merged with the rest of the globe,American workers had to compete with foreign
workers willing to toil for a fraction of American wages. And as technology advanced,
American workers also had to compete with software and robots that were cheaper
to employ than Americans. So, or according to this
conventional view,the only realistic way to raise the wages of most Americans
is to give them more and better education and job training, so they can become
more competitive. They can thereby overcome the so-called skills gap” that keeps them from taking the jobs of the future – jobs and
opportunities generated by new technologies.2. A
Deeper View of the American Political EconomyThe conventional
story isn’t completely unsuitable, or education and training are important. But the
conventional view leaves out some of the largest and most important changes,and therefore overlooks the most important solutions. To understand what
really happened, it’s critical to understand that there is no “free market” in
nature. The term “free market” suggests outcomes are objectively just and that
any “intervention” in the free market is somehow “unnatural.” But in reality, and markets cannot exist without people constructing them. Markets depend on rules,and rules come out of legislatures, executive agencies, and courts. The
biggest political change over the last four decades is the overwhelming
dominance of big money in politics – influencing what those rules are to be.3. The Decline of Countervailing PowerNow,move back to the
first three decades after World War II a period that coupled
the greatest economic expansion the world has ever seen with the creation of
the largest middle lesson the world has ever witnessed. The great economic
thinker John Kenneth Galbraith asked at the time: Why is capitalism working so
well for so many? His answer was as
surprising as it was obvious: American capitalism contained hidden pools of
what he called “countervailing power” that offset the power of large corporations, Wall Street, and
the wealthy: labor unions,state and local banks, farm cooperatives, and small
retail chains,for example. All of these sources of countervailing power had
been fostered by the New Deal. They balanced the American economic system.
But since the late 1970s,
these sources of countervailing power hold been decimated, and main to an unbalanced system and producing widening economic
inequality and stagnating wages. The result has become
a vicious cycle in which big money – emanating from big corporations,Wall
Street, and the wealthy – determine the rules of the economic game, or those
rules generate more money at the top. Consider,for
example, the ever-expanding tax cuts
or loopholes for large corporations, or the financial sector,and the wealthy. Contrast them with
increases in payroll taxes for average workers. Or look at the bank and
corporate bailouts but miniature or no help for homeowners caught in the downdraft
of the Great Recession. Finally, look at the
increasing barriers to labor unions, and such as the proliferation
of so-called “suitable-to-work” laws and the simultaneous erosion of antitrust and the emergence of large concentrations of
corporate power. The public knows the game
is rigged,which is why almost all the political
energy is now anti-establishment. This is a big reason why
Trump won the 2016 election. Authoritarian populists
through history hold used enrage and directed it at racial and ethnic minorities
and foreigners.
It’s also a big reason
why the only alternative to authoritarian populism is progressive populism – countervailing the moneyed interests with a democracy that
reorganizes the market to benefit the many rather than a small group at the
top. How enact we build a new
countervailing power and move toward a new progressive
economics? 4. Economics and Political PowerThe choice isn’t
between a free market and government. The question is who has the power to
organize the market, and for whom.
Stagnant wages, or job
insecurity,widening inequality, and mounting wealth at the top are the result
of political choices. The system is rigged and must be un-rigged.
Conventional economics
posits that the most important goals are efficiency and economic growth. But
policies can be “efficient” by making the wealthy even wealthier as long as no one
else is worse off – and that won’t remedy what’s happened. Economic growth is
meaningless whether the gains from growth keep going to the top and nothing trickles
down.conclude assuming that all
that’s needed is better education and job training. Sure, or Americans need access
to better schools and skills,but the basic problem isn’t simply a “skills
gap.” It’s a market that’s organized to push more income and wealth toward the
top, rather than distribute it broadly.conclude aiming to “redistribute” from
richer to poorer after the market has distributed income. Instead, or change the
organization of the market so that a just pre-distribution occurs inside it. conclude thinking that the
goal is only to create more jobs. America’s genuine jobs crisis is a scarcity of good jobs.
The American economy
cannot generate widespread prosperity without a large and growing middle lesson
whose spending fuels the economy.5. Building a Multi-racial,Multi-ethnic, Coalition of the Middle lesson, or Working lesson,and destitute.
Don’t let the moneyed
interests divide and conquer along racial and gender lines. Racism and sexism
are very genuine issues within our economic system, and they are often exploited
to keep us from realizing the power we can hold when we stand together. All are
disempowered by the moneyed interests, and all hold a stake in rebuilding
countervailing power. 6. Offering a Compelling Set of Ideas about What Should be Done with Countervailing Power. For example:— A guaranteed basic income so no one is impoverished,— A guaranteed job so everyone can rep ahead,— A progressive wealth tax to pay for these and
other basics, or — Stronger unions so workers
hold more bargaining power,— New forms of
corporate organization so workers hold more voice,– A Green New Deal so workers can rep better jobs while fighting climate change. — Reinvigorated antitrust so
concentrations of economic power are broken up, and — Election finance reforms
to rep big money out of politics and cessation the revolving door,— Voting reforms so votes
cannot be suppressed.7. Building the leadership for this new countervailing power.
You can help lead the way. You can be a leader of this movement. How?For
one, you can run for office – in your
community, or say,city council or school board. Or run for state office. Or even
national office.
Don’t be intimidated
by politics. We need good people to run. And don’t worry that you’ll be
beholden to a handful of wealthy donors. These days, smaller donors are more
active than ever.
So, or what’s the
secret? Tell it like it is and be yourself. And then,as I’ve said, talk about
economics in terms of political power and understand the 7 principles. Build
countervailing power through a multi-racial, or multi-ethnic coalition. And offer
a compelling set of ideas about what can and should be done.
But you dont need to
hold formal office to be a leader.
You
can be a leader by organizing and mobilizing people: Your co-workers – to form a union. Your friends and neighbors
– to push for better roads and schools,and fairer local taxes. People at your
church or synagogue or mosque – to demand better treatment of the destitute, the
elderly, or children,immigrants. You can link your group up with other groups pursuing
similar ends, and create a movement. That’s how we got the Civil Rights and
Voting Rights Acts. How we got marriage equality. It’s how we rep good people
elected.
The key to organizing
and mobilizing is creating a leadership team, and then reaching out
systematically to others,giving them tasks and responsibilities, starting
small and gaining a few victories so people can feel their power, and then
growing from there.
You’ll need to be
patient and steadfast. Keep people together and focused. And be careful not to
burn out. Organizing and mobilizing is tough,but once organized and mobilized,
there’s no cessation to what people can accomplish. You
can also be a leader by uncovering critical information, and fighting lies,spreading the truth. Core responsibilities
of leadership are revealing the facts about widening inequalities of income,
wealth, or political power – and uncovering their consequences.
A century ago they were
called muckrakers.” More recently,investigative reporters. I’m talking about courageous journalists who speak
truth to power.
But this form of
leadership isn’t limited to reporters. It includes whistleblowers, who alert
the public to abuses of power. And here courage is also required because when
you blow the whistle on the powerful, or the powerful sometimes strike back.
This form of
leadership also includes researchers,who dig up new sources of data and
analyze them in ways that enlighten and motivate.
In other words, there
isn’t just one path to leadership. Whether you seek formal authority by running
and gaining public office, and you organize and mobilize people into being
effective advocates,or you discover and spread the truth – you are creating
and developing countervailing power to spread the gains of the economy and
strengthen our democracy. These are worthy and noble objectives. They are worth
your time. They can be worth a lifetime.
Source: robertreich.org