Whose Economy Is It?
We need not wonder why our economic system is dysfunctional. We are letting the animals run the zoo.
We have the mistaken notion that an economy exists for the use of private enterprise to conduct activities for profit. Though private enterprise is a useful and necessary part of the system, it does not own the economy, nor should it be allowed to run it.
For whom does an economy exist?
If we were to ask that question about a government, most of us would answer, "For all the people in the country." The first 3 words in the Constitution's preamble are We, the people.
But about the economy, though the answer should be the same, we have not declared it with the same consensus of national principle. Too much myth has been espoused that the economy runs itself. That has never been the case, but that idea has too often resulted in having to fix it when it's broken rather than regulating it so that it doesn't break.
The system cannot be run for the sake of private enterprise. That is like driving a car for the sake of the engine. Private enterprise is the engine. It is only a means to organize the production to fulfill the needs of the people. When it doesn't do that, or fails to do it well, it is not meeting its purpose.
Making a god of private enterprise, the practioners of which then make a god of profit, is ruinous to the system. It results in letting the system run out of control, so that it feeds itself to the detriment of the people, and it eventually self-destructs.
He have watched that happen. Those involved in private enterprise never learn that lesson, because we have allowed them to believe the system is run for them; that they have been given the country's resources and its people to use in the quest for ever higher profits.
We cannot continue to let the capitalists run the economy, any more than we should let the animals run the zoo. The analogy is perfectly valid. While some individuals who manage businesses are capable of rational and cooperative behavior, corporations as a whole have proven that they lack that ability. They are not human beings
Most large corporations behave in a way that lacks any sense of morality and responsibility to the society of which they are a part. Given the opportunity, they will abandon their role of employer to the very people who are the consumers of their products and import from or build factories in other countries where there is cheaper labor.
That is clearly not a long-term sustainable policy, because of the harm it does to their consumer base and to the strength of the economy in general, but that is not the way a corporation thinks.
CEO's and Boards of Directors represent the absentee owners of the corporation, those who have purchased stock in it.
Making the stockholders the ultimate owners whose interests are served, removes the humanity from the decision-making. Although many of the stockholders may be decent human beings, their interest in the stock is purely profit. They have no practical involvement in anything else about the company. It's a system designed to filter out any non-monetary values and any concern about the larger picture.
The corporation, a primal creature with a single-minded goal- to eat and grow, creates a competitive environment that molds even individual company owners to become just as amoral and greed-motivated as any corporation. They are part of a culture which feels no responsibility to society as a whole.
That is the reason that the court decision that corporations are persons is so wrong. They have more power than human beings, but do not have a sense of morality, ethics, or empathy. They are immortal for as long as they have profit or wealth, and fear only sustained losses. The people who manage and work for them are their servants, not masters.
Efforts to reward private enterprise for the desired behavior meet with little success. Sure, they like low taxes, but what do they do with the savings? Deposit the thousands along with the millions they already have. There is no gratitude in business. They aren't waiting for a tax break to invest in something productive that provides jobs. They're waiting for more demand, and that takes money in the hands of people with needs.
Even rescuing those in trouble results in no sense of loyalty to American taxpayers who bailed them out, unless strict conditions are attached.
So, how do we get private industry under control and working properly in the national interest for all Americans?
First, we must get business out of politics. This has been made more difficult by the Supreme Court's bizarre ruling that corporations are persons, but we must find ways to greatly reduce the need for huge funds for political campaigns. The licenses of broadcast media should include an obligation to air candidates debates and statements free of charge. Private political advertising should be subject to an equal time rule for opposing viewpoints. If we cannot limit campaign financing by its source, we should limit it as a whole, including spending by the candidate from personal wealth. It should be possible for any candidate without a lot of money, and without wealthy backers to campaign for office using radio, television, and the internet to get a message to voters throughout the nation. Having a democratic process free from corruption is worth doing what it takes to set up such a system.
Congress and officials in the other two branches can also be influenced when their personal wealth is invested in businesses that may be affected by their decisions or votes. It is impossible to determine in advance what conflicts of interests may occur. While many may be honest and not be affected, the only sure and uncomplicated way is to require divestment by all elected and appointed Congressmen, Federal judges, and administration officials. Only US Savings Bonds investments would be allowed while in office.
Corporations are licensed by states under a wide variety of state laws. Some states compete for incorporations by providing permissive laws, resulting in little effective control. Delaware, for example, is home to a disproportionate number: 50 percent of US publicly traded corporations.
Any corporation which does business outside of a single state should be licensed and regulated by the Federal government and required to comply with principles of economic responsibility.
For example, there should be a clear distinction between a manufacuring company and an import business. Corporations with a manufacturing charter would be obligated to make their products in the US using American workers. Importing parts would only be permitted with proof that it is impossible to produce them domestically.
International trade can be beneficial to the economy, but it must not replace domestic production as it has too often been allowed to do. There will be a need for import duties as long as there are unequal economies in the world. If we expect, as we should, our corporations to build things here, we must keep the market fair for them.
Importers should be prohibited from rebranding as their own any product they import, even if they own and operate the foreign manufacturer. Consumers need to clearly know whether they are buying a product made by American workers, or not.
Importing companies should also be subject to strict scrutiny regarding labor standards in the originating factory, whether or not they are in direct control of it.
Corporations must not only hire Americans but pay and treat them fairly. Labor laws are important, but by themselves they are insufficient to ensure safe and humane workplaces and conditions, and wages that are a fair share of the wealth that workers create. No regulating agency can be everywhere at once,
Labor unions with the right and power to collectively bargain are what built the middle class and kept it growing up through the 1970's. We now need to rebuild it until working people have a living wage, able to provide for themselves and their families without going into debt, and able to save enough for their children's higher education. Workers rights must be established as inalienable.
Some reduction in employment is not caused by recession or outsourcing, but by increased automation. Technology will progress, and we must find ways to adjust our system to deal with it. It is illogical for a society as a whole to exert more effort than is necessary to fulfill its needs, yet the system allocates individual incomes primarily for human work done. We will increasingly need to create a new system that translates gains in efficiency from automation into public benefit. If we fail to do that, we will have the ironic result of society suffering from inventive progress.
It has been said been said by conservatives that assistance to the poor makes them lazy and unwilling to work. That is probably untrue of most.
However, there is a similar dynamic that affects the opposite end of the spectrum.
For over thirty years we have been making our wealthy people lazy. We have been making it easy for them to continue to accrue wealth without contributing more than minimally to the economy as a whole. We are taxing them at only half the rate that we should. Naturally they and their Republican party are pleased with this and continue to claim they will create more jobs because of these lower taxes. As most of us have noticed, however, this is far from true.
Contrast this with the many years of healthy economic growth, which included a steadily broadening of middle class prosperity, when the upper tax brackets paid up to 80%. Bribing them to do more by cutting their taxes simply doesn't work. It has the opposite effect than intended. People who already have a good income tend not to expend extra effort unless they need to.
In addition the low taxes add greatly to Federal budget deficits. The upper tax bracket should be a minimum of 60%.
Inadequate financial regulation has also added to the problem. Rather than build manufacturing and service industries that would employ workers, those with money find it much easier to make more money speculating. They produce nothing, but generate a high risk of a crash harmful to the economy. Real estate speculation has been especially harmful by artificially generating much higher prices for homes, making them harder to afford for those with modest incomes. It also creates the well-known housing bubble which unavoidably eventually crashes.
As we know, oil speculation, not actual shortages, is the cause of high and fluctuating fuel prices. Until we are free of dependence on petroleum for energy, the use of vital commodity markets as a gambling casino for the rich should be prohibited. Anyone purchasing significant amounts of oil should be required to accept delivery.
Our economic system, like our democratic government, belongs to all the people, and needs to be operated for their benefit. For that to happen, those who participate in its business must do so not only honestly but with responsibility toward the system.
We must remove the excess influence of the practitioners of private enterprise from politics in order to have an actual working democracy which can effectively control and regulate the economy.
Corporations must be Federally regulated so they do not abandon their responsibility to produce in America and employ Americans.
Imports must be kept from unfairly competing with domestic production.
With both labor laws and effective labor unions we must assure workers of a fair share of the value they produce.
Proper taxation of higher incomes must be restored to help balance budgets and provide real incentives to the holders of wealth to contribute to the economy.
Excessive speculation should be curtailed.
Economies do not go into recession because the people suddenly cease to need what has been produced for them. They do so because we have allowed private interests to run and manipulate them for their own benefit, to the detriment of the economy as a whole, and the people to whom it belongs.
What I have outlined here is not a major change to the economic system. It is only a realization that an economy must belong to all the people; that it exists for the benefit of all. If it does not, then a government of the people will actually be controlled by those who control the economy.
It will not be easy to take back our government and our economic system, but the most important step is to realize that we must.