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 ...)
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 …
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