Revolution

As I discussed in my previous post, Robert Reich believes it a false dichotomy to pit "government" against "free markets."  As I put it yesterday,

Reich's point, and I fully agree, is that the so-called "free market" is a myth.  There is ONLY the game defined by the "existing rule of law," such as it is, and this game benefits some more than others.  If someone comes along and wants to "change" the "rule of law," we should not wonder whether it trends to some halcyon "free market" where the beneficent "invisible hand" bestows blessings on all alike, nor should we wonder whether it trends to some "communist paradise" where the beneficent "government" bestows blessings on all alike, both of which are myths.  We should rather ask the more cynical question of "who would benefit from this change and how?"  Any change to the "rule of law" governing our economic life will simply change, so to speak, the balance of benefits.

It seems clear enough that the "balance of benefits" has tipped away from the American people as a whole, toward a very small segment of the American population, the so-called 1 percent, or the wealthiest of the wealthy.  To be frank, I have no truck with the republican party.  They have, I believe, misled the American people more profoundly than the democrats, hiding an economic agenda behind a "conservative" social agenda that itself is fraught with various and sundry forms of intolerance itself masked with fundamentalist religion.  The democrats, at least since Clinton, are only slightly better.  Rhetorically, at least, they acknowledge the current "balance of benefits," but the response has been, for the most part, a resigned shoulder shrug -- there seems to be little that can be done, except perhaps tinkering at the margins, especially in the current "polarized" political climate that stymies action.  If the Obama administration began with the "audacity of hope," it ends with the "whimper of resignation."

Think of it this way.  Right now, as we speak, we have a "status quo."  Truly revolutionary action, throwing the "status quo" out the window and beginning again, scares the hell out of people.  The social upheaval of the late sixties/early seventies resulted, not in fundamental systemic change, but the paranoid presidency of Nixon, who promised to restore "law and order." It has been downhill for the American people ever since.  The ineffectuality of Ford following the impeached Nixon was exceeded only by the ineffectuality of Carter following Ford.  The result was Reagan and the new conservatism which tilted the balance of benefits away from the many toward the wealthy few.  Reagan, at least, was effectual in helping create something of a "new" status quo.

This "new" status quo emerged not suddenly, but by a thousand little "tweaks" that tilted the balance of benefits in the direction of the wealthiest Americans. Think, for example, of the so-called Reagan tax cuts, the Economic Recovery Act of 1981.   The tax cuts reduced the top rate on the marginal income tax to 50% from 70% for those at the top to 11% from 14% for those at the bottom -- in other words, a 20% cut for those at the top of the income scale, a 3% cut for those at the bottom of the scale.  It doesn't take a math genius to see who benefits the most.  Likewise the reductions in the estate tax, which ONLY benefited those with an inheritable estate to tax.  Again, it doesn't a genius to see who benefits the most.  The ideological justification that the cuts "improved the economy" and consequently those "improvements" actually benefited all Americans has been discredited by the facts.  Income has gone up by leaps and bounds for those who received the lion's share of the cuts at the top of the scale.  It has stagnated for those who received the lamb's share of the cuts at the bottom of the scale.

I believe we are caught in a vicious circle.  I do not think our politicians are corrupt, at least not in the conventional quid pro quo sense of the word.  I don't think they take bribes, per se, but it seems counter-intuitive to think that large campaign donations do not translate into "access," and it seems equally counter intuitive to think that "access" does not translate into "influence."  The largest corporations spend a considerable amount of money on professional "persuaders" who work in the interest of the largest corporations. As money accumulates at the top, their "influence" increases, which in turn increases the amount of money accumulating at the top ... and so on.  How long can it go on?  Well, indefinitely.  It will likely go on until a combination of one of two things happen:  (1) the system, so to speak, crashes as it did with the great depression and as it ALMOST did with the great recession, or (2) the people find it intolerable and rebel.  We seem to be teetering on the edge of both.  Since there were few if any real changes made to the banking laws, few if any changes made to the status quo as reflected in the existing rule of law, it seems likely that greed with over come prudence and wall street will find new and exciting ways to play economic brinkmanship, particularly when the potential rewards are so great and the penalties so comparatively modest for those at the top.

Will the people put up with a second "bail out" of those banks that are not only too big to fail, but too big to prosecute?  At the moment, I don't think the people find the current situation intolerable enough to rebel.  Neither of the populist insurgencies of Trump and Sanders are truly revolutionary, but they are, to use the current business jargon, "disruptive."  Trump has succeeded in unmasking many of the conservative pieties, and Sanders has succeeded in revealing just how little "progress" we have made on the "progressive" agenda.  The backlash is predictable.  All Ryan's and Romney's hand wringing aside, some of what Trump and Sanders propose -- e.g. a re-examination of our trade agreements -- might actually tilt the balance of benefits back in the direction of the American people, but it is unlikely to reverse the general direction, particularly if the republicans maintain control of the congress.