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Democratic Capitalism – Our Flawed Political and Economic System

12/28/2014

7 Comments

 
We must recover the whole sense of gift, of gratuitousness, of solidarity.  Rampant capitalism has taught the logic of profit at all costs, of giving to get, of exploitation without looking at the person … and we see the results in the crisis we are experiencing!  - Pope Francis

For my first blog I wanted to touch on an issue that I think will dominate the 2016 Presidential Election … the failures of Democratic Capitalism.   I first became aware of this term while listening to a lecture by Professor David Pringle of the University of Texas on Youtube (sorry, I can’t find it anymore … it may have been pulled).  He describes Democratic Capitalism as the primary construct of the political and economic system in the United States and has authored a book on the subject. Pringle appears to have reconciled himself to these two strange bedfellows, democracy and capitalism, but I am not convinced that they can successfully coexist in a functioning American society ... at least not without significant and effective governmental intervention. 

In the glory years of our country after World War II, democracy and capitalism were viewed as an enormously successful collaboration.  In the 1950’s a quote was making the rounds to the effect that  “what is good for General Motors is good for the country.”  This phrase was actually a misquote from the former CEO of General Motors and later Secretary of Defense, Charles Erwin Wilson … but it nicely captured the idea that thriving American companies automatically translated into thriving American workers.  And this simplistic philosophy actually seemed to work, from the end of the war to the early 1970’s.  Then reality began to intervene …

In the 1970’s the economies of Western Europe and Japan finally recovered from the devastation of the war, and they began to compete against the American monolith.  By the 1980’s American families were beginning to struggle financially, and women entered the workplace to add their incomes to those of their husbands, in a desperate attempt to maintain their families’ high standard of living.  The Reagan administration made the lives of American workers far more difficult by actively encouraging companies to close their factories in the US and move them overseas to take advantage of cheap labor costs and to avoid strict US environmental standards.

Then the financial wizards of Wall Street began to pile on by placing increasingly risky speculative bets to enlarge their pile of loot.  Their reckless greed resulted in the collapse of the savings and loan industry in the late 1980’s and ultimately the financial destruction of 2007/2008.  In the process the barons of Wall Street and the major corporations learned how to lobby government and turn it to their will. 

Companies continued lowering labor costs by jettisoning defined benefit pensions.   The minimum wage was allowed to fester, dropping in real terms to half of its former value.  Ordinary Americans became increasingly disenfranchised and struggled to maintain their standards of living by building up major debt loads in the early 2000’s.  This house of cards came crashing down in 2008, carrying with it their sole retirement savings, their 401K accounts. 

And so, here we are.  Under President Obama, Americans have seen their job prospects and retirement savings recover, but not to the levels of decades past.  Americans now accept that their standard of living is falling.  There is a major generational divide occurring with people in their 20’s facing fewer jobs, lower pay, fewer benefits, and massive student debt.  But their parents are hardly unscathed; many of them are facing a future without a dignified retirement, one in which they will have to work until illness or death intervenes.

We now know that the United States has changed to a winner-take-all, Vegas-style economy in which the top one percent (actually far less than one percent) realize virtually all of the financial gains while the rest of us live hand to mouth.

This is the issue of our times.  How do we deal with the growing inequality of income and wealth as clearly articulated by Robert Reich in his documentary, Inequality for All?  (See Reich's interview with Bill Moyers in the following clip ...)



I believe the next Democratic Presidential Candidate must confront this issue head-on.  The person at the head of the ticket must reconsider the Democratic Capitalism construct that is now so obviously flawed.  That woman or man must be a transformative leader willing to stand up against Wall Street and corporate elites, a leader who is a true populist speaking to ordinary Americans who are being devastated by political inaction and corruption.  I believe the next candidate must return to Franklin Roosevelt’s Depression-era philosophies and provide the next New Deal for Americans, resurrecting FDR’s idea of an Economic Bill of Rights.   And once and for all, our Democratic Presidential Candidate should pledge to end the unwarranted accumulation of wealth by a few capitalist elites and move their “windfall profits” to the US Treasury to be used for the betterment of the American people.

I welcome your ideas on this issue.  I will be returning to this theme in future blogs exploring different aspects of the problem.  And thanks for giving me this platform …
7 Comments
Thom Tibor
12/30/2014 02:50:12 am

Excellent article Rick. I could not agree more. There must be caps on compensation packages to the elite class in America, when the CEO makes 1000s more times the earnings of his average worker this is morally wrong. When the Yankees want to pay some one $25 million to play 3rd base and the Dodgers want to pay $20 million to some one to pitch these injustices must be corrected by a tax policy.

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Rick Gardner
12/30/2014 08:48:36 am

Thanks Thom. I guess the question is, who will make the changes to the tax policy? Right now, the lobbyists are controlling the votes of the politicians, and they don't want higher taxes on their wealthy brethren.

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Norm Clarke
1/4/2015 08:19:19 am

Great analysis Rick. It is consistent with what I see on left leaning blogs. I think the “wealthy elite” are fully aware of it too and know that such income disparity is not sustainable in a democracy. What I find striking is that democrats hope using arguments of logic and compassion will somehow cause Republican and Democrat politicians to resist facilitating the flow of wealth to their benefactors at the top of the wealth heap. Study after study has shown that legislation favors the desires of the wealthy. We basically have the addicts in charge of the pharmacy.

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Rick Gardner
1/5/2015 12:20:48 pm

Norm, I agree that efforts to stop legislation favoring wealthy corporate interests have been ineffectual. The question is, how do you reverse this legislative juggernaut? The more thoughtful people have concluded that we must remove money from politics by having strict controls on campaign financing. Of course, the trend with Citizens United and other rulings is in the opposite direction.

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Norm Clarke
1/5/2015 01:04:54 pm

What politician is going to vote for controlling campaign financing? In as serious not superficial way. Not anyone currently in office hoping for another term. The left often doesn't vote because they are discouraged that candidates don't support their individualistic peripheral pet causes while the right wing marches their people to the polls in fear of socialism, deficits, terrorism, crime, influxes of immigrants, wars on Christmas, Ebola, Sharia Law or whatever new crisis they can manufacture and get people to tune in to. All the while being clueless on the real issues like global warming, nuclear Pakistan, crumbling economies in Europe, a irrational Putin, disintegrating into chaos Middle East, Between 2000 and 2010, 335,609 died of gun violence. Where is that in the headlines or national debate? How does that compare to the threat of "Terrorists" The difference is there is no money in controlling guns but lots of money in selling guns.

Bob Rust
2/4/2015 03:53:33 am

Rick, you are, of course, right on. There are no short term solutions to our national malaise, but I do have some suggestions that I think would help:

*support Obama's free K-14 plan. 12th grade or less education probably portends a lifetime of scratching for jobs, and living close to the poverty line. We need smart citizens.

*someone really does need to charge, take to court, and win the case for treason against Murdock, Ailes, and Fox News. The constant drumbeat of misinformation, outright lies, and scurrilously defamatory shrieking has got to be stopped. They are using fear to govern the country, and there are too many ovine, weak-minded people available to them (see fist bullet above)

*stop with term limits. That's what elections are for. No one seems to want career politicians, but in the frenzy to stop that breed from forming, we don't let anyone grow and learn enough in office to be productive and effective. Term limits allow lobbyists and staffers to become the real lawmakers. Those people are unelected and unaccountable, and their loyalty is unknown. While we're at it, we need to change all two year terms in the country (state and federal) to four years, to stop the never-ending fundraising cycle.

*keep working for democrats. I don't know what to do with Scalia, Thomas, Alito, and Roberts, but they are going to be a force to be reckoned with as long as they occupy SCOTUS seats. Scalia may be thinking about retirement, but Thomas wants to die on the bench (he's not very old), and Roberts is practically a kid. They've inserted so much money in politics, we may never recover. One thing for sure, we've got to keep as many Dems in power as we can for the foreseeable future.

*and about those Dems we elect: could we find some with spines who will stand up for what Obama's accomplished, speak out for fair wages and equality, make noise about our environment and climate change, fight to keep our schools public and free of religious pressure, stand up for Common Core, fight for government based single payer healthcare, embrace science, make higher education affordable, and speak Truth to the right wing ninnies who are dragging our country to its ruination?

I have grandkids for whom I fear the future will not be pleasant, not if the Kochs have anything to say about it. If we start now, they have a chance. If the Kochs and Fox and plutocrats prevail, they're going to have a crummy future.

Reply
Rick Gardner
2/5/2015 08:16:39 am

Bob, Excellent points. Your last point about finding Democrats "with spines" really resonated with me. Unfortunately, the pernicious influence of money really hampers objective analysis and free speech. I can point to several instances where I took a stand on an issue, only to be mysteriously pummeled by someone. Turns out that person had a financial interest in the issue. For instance, if you discuss single-payer health care with an insurance agent, you better be prepared for a battle. Each issue has a core of people who are vested in ensuring the current system remains ...

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    Ariana King is the President of the Democratic Club of Camarillo.  Look for her blog every month.

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