“Corporations Are Artificial, Too”: Modern Corporate Capitalism Is Anything But Natural
One of the reasons it’s difficult for liberals to easily and effectively win arguments about economics with conservatives is that conservatives have a very simple mantra: let the natural forces of the market do their work. Government is seen as an interloper and distorter of Darwinian forces that would otherwise ultimately let all goods and services achieve their perfect prices with maximum efficiency.
There are a number of gigantic problems with that worldview, of course. The free market refuses to pay for a wide variety of crucial infrastructure items and investments in public health and safety; consumers are at an information and power disadvantage against unscrupulous companies; and human life and dignity are unacceptably cheap on the open market.
But there’s another key lie in the conservative “natural economy” story, which is that modern corporate capitalism is anything but natural. It’s an artificial system encoded arbitrarily into law and interpreted in a specific way that tends to give maximum advantage to executive and shareholders at the expense of society. Kent Greenfield examined right here at Washington Monthly one way in which that is true: the Dodge v. Ford case that explicitly denied corporations the right to engage in more socialistic practices and demanded that they only serve the bottom line for their shareholders. The corporate veil itself another artificial legal construct, as is the notion of corporate personhood.
Our society is built on rules and regulations, all of them socially and legally built out of artifice. That is just as equally true of business as it is of government.
By: David Atkins, Political Animal Blog, The Washington Monthly, January 24, 2015
“Now We Know”: Economic Inequality Is A Malady — Not A Cure
It has been a long, long time since Americans accepted the advice of a French intellectual about anything important, let alone the future of democracy and the economy. But the furor over Thomas Piketty’s stunning bestseller, Capital in the 21st Century – and especially the outraged reaction from the Republican right – suggests that this fresh import from la belle France has struck an exposed nerve.
What Monsieur Piketty proves, with his massive data set and complex analytical tools, is something that many of us – including Pope Francis — have understood both intuitively and intellectually: namely that human society, both here and globally, has long been grossly inequitable and is steadily becoming more so, to our moral detriment.
What Piketty strongly suggests is that the structures of capitalism not only regenerate worsening inequality, but now drive us toward a system of economic peonage and political autocracy.
The underlying equation he derives is simple enough: r > g, meaning the return on capital (property, stock, and other forms of ownership) is consistently higher than economic growth. How much higher? Since the early 1800s, financiers and landowners have enjoyed returns of roughly five percent annually, while economic growth benefiting everyone has lagged, averaging closer to 1 or 2 percent. This formula has held fairly steady across time and space. While other respectable economists may dispute his methodology and even his conclusions, they cannot dismiss his conclusions.
As a work of history and social science, Capital in the 21st Century outlines a fundamental issue while providing little in policy terms. Piketty mildly suggests that nations might someday cooperate in a progressive and global taxation of capital gains, with shared proceeds. There isn’t much reason to hope for any such happy solution. But then it isn’t up to Piketty to solve the problem.
He has already done America and the world a profound service by demolishing the enormous shibboleth that has long stood as an obstacle to almost every attempt at economic reform, from raising the minimum wage to restoring progressive taxation: Only if we coddle the very wealthy – and protect them from taxation and regulation — can we hope to restore growth, employment, and prosperity. Only if we meekly accept the revolting displays of power and consumption by the very fortunate few can we expect them to bestow any blessing, however small, on the toiling many.
If you read Piketty – whose translation into English by Arthur Goldhammer makes macro-economics a literary pleasure – you will quickly realize that we’ve been told a big lie about this most basic social bargain. The stratospheric accumulation of rewards accruing to the top 0.01 percent of owners, at the expense of society and everyone else, is not only unnecessary to promote growth; in fact, that unfair dispensation retards growth.
Rather than argue honestly with Piketty’s findings, right-wing responses have varied from old-fashioned redbaiting, although he is plainly no communist, to juvenile misrepresentation of a book that at least one critic admits she didn’t bother to read! The boneheaded Tea Party reaction is to accuse him of demanding that sanitation workers earn the same salary as surgeons – although he explicitly agrees that a degree of inequality is important to encourage innovation, enterprise, and industry.
“I have no interest in denouncing inequality or capitalism per se,” he notes early in the book. But then the wing-nuts and trolls attacking him have no interest in debate, let alone knowledge. They hate social science just as much as they hate plain old science.
For the rest of us, Piketty’s opus poses an epochal challenge. Confronted with the truth about exacerbating inequality and the costs imposed on democratic society, what are we going to do about it? History provides a few clues if not a blueprint. The highest level of economic equality and social strength in the West arrived during the postwar era – back when unions were strong, taxes restrained the rich, minimum wages were higher, and redistribution was not a dirty word.
It will be the task of the next generation to restore decency and democracy – and save the planet — against the ferocious political resistance of the super-rich. They can now begin by discarding the ideological illusions that Piketty has so neatly dispatched.
By: Joe Conason, Editor in Chief of NationalMemo.com; Cross-Posted in TruthDig, The National Memo, April 25, 2014
“How Conservatives Are Destroying Capitalism”: The GOP Is Working Nonstop To Exacerbate The System’s Worst Excesses
I’ve written before about how Thomas Piketty’s great new book Capital in the Twenty-First Century has made free-market conservatives distinctly uneasy. Perhaps for the first time in the post-war era, a genuine American socialist movement might be on the horizon, thanks to growing awareness both of rising income inequality and of a system that is flagrantly rigged in favor of the financial elite.
Paradoxically, conservatives are more responsible for this socialist resurgence than anyone. By fanatically opposing the kind of mild — and yes, socialist-tinged — reforms that would make capitalism more tolerable for the most vulnerable in society, conservatives are stoking a leftist bonfire.
Some conservatives, like the reformist Michael Strain, seem to grasp the problem. But most appear to exist in a kind of time warp in which the Soviet Union still exists and leftist ideas are obviously self-discrediting. Jim Pethokoukis gave us an example of this at National Review:
Thanks to Piketty, the Left is now having a Galaxy Quest moment. All that stuff their Marxist economics professors taught them about the “inherent contradictions” of capitalism and about history’s being on the side of the planners — all the theories that the apparent victory of market capitalism in the last decades of the 20th century seemed to invalidate — well, it’s all true after all. In their progressive hearts, they always knew it, knew it, knew it! The era of big government is back! Let the redistribution commence! [National Review]
Sorry, Jim, jeering just isn’t going to cut it anymore.
Take it from someone who had no stake in the intellectual arguments that dominated the postwar era. When I graduated from college in 2008, the American economy was hemorrhaging 600,000 jobs per month. The country was undergoing a crash course in subprime mortgage-backed securities, collateralized debt obligations, and credit default swaps. Aggregate demand was collapsing, and liquidity was freezing up. The appropriate response would have been to spend like a drunken sailor until unemployment was restored, then cut back slowly and start paying down accrued debt. Thank God we were about to elect this Obama fellow, because he knew what he was doing, right?
Wrong. We did pass the (badly underrated) stimulus, but the likes of Paul Krugman were howling themselves hoarse that it wouldn’t be enough to restore full employment. He was, of course, completely right.
Unemployment rose steadily, peaking at over 10 percent before coming down with agonizing slowness. Meanwhile, the vast bulk of newly created wealth went straight to the rich. If all of this isn’t indicative of an enormous failure of capitalism, then I don’t know what is.
Then the Left watched with increasing horror as the entire United States political mainstream turned from stimulus to austerity, abandoning a job that was not even half-done.
Then the Republican Party — which not even two years before had proposed its own $713 billion stimulus — won a sweeping victory in the 2010 midterms, and with a crazed messianic fervor dedicated itself to making everything worse as fast as possible. They demanded Herbert Hoover–style austerity and repeatedly held the government’s credit rating hostage to get it, which they succeeded in doing (abetted by Democratic “moderates,” to be fair). As a result, we’re well past the halfway point of our first lost decade with no end in sight.
Current political debates, while not quite so mind-blowingly bizarre as those in 2010–11, are still striking in that even political moderates are willing to toss millions of the most vulnerable people overboard for very poorly defined reasons. Unemployment isn’t even close to low, and yet repeatedly discredited inflation paranoiacs are, again, cooking up highly suspect new reasons to crush wage growth.
In short, political elites have been doing all they can to convince lefties that Marx was pretty close to the mark on that whole rich-exploiting-the-poor thing. Republicans in power are against even the mildest moderating structures to keep the middle class and poor from being left behind by galloping inequality; instead, they are for obliterating what inadequate protection we do have and for savage austerity that would increase the population of desperate jobless.
Every new Paul Ryan budget — all of which openly gut safety net programs — is another bundle of kindling on a potential leftist bonfire.
By: Ryan Cooper, The Week, April 10, 2014
“The Undeserving Rich”: Capitalism As Currently Constituted Is Undermining The Foundations Of Middle-Class Society
The reality of rising American inequality is stark. Since the late 1970s real wages for the bottom half of the work force have stagnated or fallen, while the incomes of the top 1 percent have nearly quadrupled (and the incomes of the top 0.1 percent have risen even more). While we can and should have a serious debate about what to do about this situation, the simple fact — American capitalism as currently constituted is undermining the foundations of middle-class society — shouldn’t be up for argument.
But it is, of course. Partly this reflects Upton Sinclair’s famous dictum: It is difficult to get a man to understand something when his salary depends on his not understanding it. But it also, I think, reflects distaste for the implications of the numbers, which seem almost like an open invitation to class warfare — or, if you prefer, a demonstration that class warfare is already underway, with the plutocrats on offense.
The result has been a determined campaign of statistical obfuscation. At its cruder end this campaign comes close to outright falsification; at its more sophisticated end it involves using fancy footwork to propagate what I think of as the myth of the deserving rich.
For an example of de facto falsification, one need look no further than a recent column by Bret Stephens of The Wall Street Journal, which first accused President Obama (wrongly) of making a factual error, then proceeded to assert that rising inequality was no big deal, because everyone has been making big gains. Why, incomes for the bottom fifth of the U.S. population have risen 186 percent since 1979!
If this sounds wrong to you, it should: that’s a nominal number, not corrected for inflation. You can find the inflation-corrected number in the same Census Bureau table; it shows incomes for the bottom fifth actually falling. Oh, and for the record, at the time of writing this elementary error had not been corrected on The Journal’s website.
O.K., that’s what crude obfuscation looks like. What about the fancier version?
I’ve noted before that conservatives seem fixated on the notion that poverty is basically the result of character problems among the poor. This may once have had a grain of truth to it, but for the past three decades and more the main obstacle facing the poor has been the lack of jobs paying decent wages. But the myth of the undeserving poor persists, and so does a counterpart myth, that of the deserving rich.
The story goes like this: America’s affluent are affluent because they made the right lifestyle choices. They got themselves good educations, they got and stayed married, and so on. Basically, affluence is a reward for adhering to the Victorian virtues.
What’s wrong with this story? Even on its own terms, it postulates opportunities that don’t exist. For example, how are children of the poor, or even the working class, supposed to get a good education in an era of declining support for and sharply rising tuition at public universities? Even social indicators like family stability are, to an important extent, economic phenomena: nothing takes a toll on family values like lack of employment opportunities.
But the main thing about this myth is that it misidentifies the winners from growing inequality. White-collar professionals, even if married to each other, are only doing O.K. The big winners are a much smaller group. The Occupy movement popularized the concept of the “1 percent,” which is a good shorthand for the rising elite, but if anything includes too many people: most of the gains of the top 1 percent have in fact gone to an even tinier elite, the top 0.1 percent.
And who are these lucky few? Mainly they’re executives of some kind, especially, although not only, in finance. You can argue about whether these people deserve to be paid so well, but one thing is clear: They didn’t get where they are simply by being prudent, clean and sober.
So how can the myth of the deserving rich be sustained? Mainly through a strategy of distortion by dilution. You almost never see apologists for inequality willing to talk about the 1 percent, let alone the really big winners. Instead, they talk about the top 20 percent, or at best the top 5 percent. These may sound like innocent choices, but they’re not, because they involve lumping in married lawyers with the wolves of Wall Street. The DiCaprio movie of that name, by the way, is wildly popular with finance types, who cheer on the title character — another clue to the realities of our new Gilded Age.
Again, I know that these realities make some people, not all of them hired guns for the plutocracy, uncomfortable, and they’d prefer to paint a different picture. But even if the facts have a well-known populist bias, they’re still the facts — and they must be faced.
By: Paul Krugman, Op-Ed Columnist, The New York Times, January 19, 2014
“Paul Ryan Lectures The Pope”: After All, “The Guy” Is From Argentina And Doesn’t Understand Capitalism
When 1.3 million Americans lose their unemployment benefits on Saturday, they can thank Rep. Paul Ryan. He took the lead in negotiating a bipartisan budget deal with Democratic Sen. Patty Murray, and on behalf of his party, held the line against continuing extended unemployment benefits for the long-term jobless.
Sure, a lot of Republicans share blame with Ryan. But he deserves extra-special (negative) credit for the deal, because he has lately had the audacity to depict himself as the new face of “compassionate conservatism,” insisting Republicans must pay attention to the problems of the poor. Friends say the man who once worshipped Ayn Rand now takes Pope Francis as his moral role model. Except he can’t help treating his new role model with arrogance and contempt.
It’s true that while knuckle-draggers like Rush Limbaugh attack the pope as a Marxist, Ryan has praised him, which I guess takes a tiny bit of courage since normally Republicans don’t like to buck the leader of their party. “What I love about the pope is he is triggering the exact kind of dialogue we ought to be having,” Ryan told the Milwaukee Journal-Sentinel. “People need to get involved in their communities to make a difference, to fix problems soul to soul.”
But he couldn’t suppress either his right-wing politics or his supreme capacity for condescension for very long. “The guy is from Argentina, they haven’t had real capitalism in Argentina,” Ryan said (referring to the pope as “the guy” is a nice folksy touch.) “They have crony capitalism in Argentina. They don’t have a true free enterprise system.”
Beltway journalists would have us believe Ryan’s love for the guy from Argentina is triggering genuine new interest in helping the poor. “My bet is that he’s on Pope Francis’ team,” a former Romney-Ryan advisor told BuzzFeed’s McKay Coppins, for a worshipful Ryan profile headlined “Paul Ryan finds God.”
I admit, I have been immune to Ryan’s various efforts to brand himself as a bright and innovative Republican over the years – and I continue to be. Let’s recall: The guy who impressed Ezra Klein as a serious albeit deficit-obsessed budget wonk turned out to be terrible at math – his heralded “Roadmap,” the Ryan budget, busted out the deficit for years and didn’t balance the budget until 2040, thanks to its generous tax cuts for the wealthy and corporations.
Now we’re supposed to believe Ryan is going to deliver an anti-poverty agenda as soon as the spring. “This is my next ‘Roadmap,’” Ryan told an aide, according to Coppins. “I want to figure out a way for conservatives to come up with solutions to poverty. I have to do this.”
Excuse me if I remain a skeptic. Ryan’s prescription for the poor is, and always has been, a dose of discipline. Even in 2010, with unemployment in his own district hovering around 12 percent, he voted against extending unemployment benefits on the grounds that they’d increase the deficit – and then reversed himself when they were coupled with an extension of Bush tax cuts, which of course added far more to the deficit than extended benefits.
Ryan has always defended his stinginess on safety net issues as tough love for the poor, giving them “incentives” to take a job, any job, to support their families.
“We have an incentive-based system where people want to get up and make the most of their lives, for themselves and their kids,” he says. “We don’t want to turn this safety net into a hammock that ends up lulling people in their lives into dependency and complacency. That’s the big debate we’re having right now.”
I don’t think Pope Francis would call our threadbare safety net a hammock.
Today, Ryan’s guide on the road to a GOP poverty agenda is the same man who has guided generations of Republicans into political self-congratulation and little else: Bob Woodson, a conservative proponent of what used to be touted as “black capitalism.” Now 75, Woodson runs the Center for Neighborhood Enterprise, and he helped inspire the dead-end “enterprise zone” movement beloved by some Republicans back in the 1980s and ’90s. Enterprise zones, which lowered taxes and created other incentives for businesses to invest and hire in low-income neighborhoods, were championed by the late Rep. Jack Kemp, who is one of Ryan’s political mentors. They have repeatedly been found to have “negligible” effects on employment, earnings and business creation in urban neighborhoods.
But Woodson apparently finds Ryan a one-man enterprise zone for restoring his national profile. (He last made headlines for attacking African-American Democrats at the GOP’s 50th anniversary of the March on Washington commemoration, insisting they let black issues languish while gays and immigrants became priorities.) Woodson is the star of Coppins’s Ryan piece, vouching for the Republican’s “authenticity” on poverty issues.
“The criminal lifestyle makes you very discerning, and everywhere I’ve taken Paul, these very discerning people have given me a thumbs up,” Woodson told Coppins. “You can’t lip synch authenticity around people like that.”
But when asked what Ryan has done tangibly for the poor, the Republican came up with one word: neckties. Apparently, according to Woodson, Ryan sent neckties to a classroom of teenagers after one admired his while he was visiting. So where conservatives used to preach that the poor should lift themselves up by their bootstraps, their new anti-poverty agenda involves neckties.
In the spirit of the holiday season, I have to admit there’s something a little bit touching about Ryan’s insistence that the GOP needs an anti-poverty agenda. Honestly, Jack Kemp would be a welcome addition to the modern Republican Party, which prefers to demonize the poor rather than empathize.
But forgive me if I can’t entirely believe in Paul Ryan’s “authenticity” on these issues. A guy so prideful that he thinks he can lecture the pope about capitalism doesn’t strike me as capable of the humility required to rethink his political beliefs. I have no doubt Pope Francis would support extended unemployment benefits, and a host of other policies to make life easier for poor people and help them find genuine opportunity. I don’t think he’d be satisfied with sending them neckties.
By: Joan Walsh, Editor at Large, Salon, December 28, 2013
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