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writing for godot

The Republican Deficits and the Crushing of the American Middle Class: The Roots of Political Alienation

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Written by Winston P. Nagan   
Tuesday, 19 July 2016 07:24

Professor Winston P. Nagan, FRSA
Sam T. Dell Research Scholar Professor of Law
Affiliate Professor of Anthropology
Director, Institute for Human Rights, Peace and Development
University of Florida
Levin College of Law

The presidential candidate of the Republican Party, Donald Trump, has spent a great deal of his time telling the American people that he is the candidate to make America great again. This assumes that America has lost its greatness. Having traveled through parts of Asia and Europe this past spring, I uniformly found people to be astounded that an American candidate for the presidency is incapable of recognizing the greatness currently of a very great nation. I also uniformly found that as an American, people assumed that as an American citizen I might be touched with some of America’s exceptional capabilities. America is great. America is not perfect and America can certainly aspire to greater levels of perfection and greatness. So where is Trump going? Trump senses a flaw in the economic system that made him a billionaire. This economic system is loosely described as economic neo-liberalism. The fatal weakness of economic neo-liberalism is that its fundamental thrust is a focus on capital usage.
Capital invests in capital in speculative deals that make more capital. Capital finds it less attractive to invest in the real economy of the working and middle class. It is for this reason that the most reputable economists in the United States have documented an inexorable drive to move the overwhelming majority of American citizens to the bottom of the economic system. In short, we have a radical expansion of inequality. This extraordinary fact is attributable to the politically inspired economic policies of the Republican right wing and their influence in Congress. Let us start at the top. Reputable economists tell us that one percent of our population take one quarter of our nation’s income. One percent of our population controls forty percent of our nation’s wealth. One percent of our population has seen their incomes rise by over eighteen percent.
The central political question is whether this kind of outcome is desirable and in the national interest of our nation. If this is desirable, is there a sound reason to justify it. There have been marginal economic theories which suggest that the one percent who have benefited so mightily are simply better than the rest of us. Although many people whom we consider talented and who have made enormous contributions and inventions to modern society have not necessarily benefited from this. The financial wizards who almost destroyed our economy in 2008 were in fact rewarded with performance bonuses. Although to their credit, they saw the irony in this and changed the label to retention bonuses. In the meanwhile, those at the bottom of the economic ladder were not candidates for any form of retention. They were candidates for pink slips.
One of the assumptions of right wing Republicans is that if we have a bigger economic pie there will be more to go around. Unfortunately, the arithmetic is the other way around. The bigger the pie, the less the American citizens share in its bounty. It would seem that our economic growth is essentially a growth that is downwards in the direction of inequality. This means we have an exponential growth in lost opportunity for the American people.
The extinction of opportunity for our people is a major social and economic loss because the success and the genius of American civilization has been its belief in human capacity and the critical importance of human resources for national prosperity. This means that when we depreciate human resources we are attacking the recipe which was at the heart of American genius. There is of course enough blame here for everyone. However, I think most of the blame must lie with Trump-like Republicans. They have historically been the most frenetic defenders of economic monopoly. Additionally, they have been successful in hijacking rational tax policy debate. No new taxes means that the weaker members of the body politic still pay while the special interests which fund the Republicans, the well-healed financial oligarchs prevail with outrageous tax holidays. Indeed, a recent survey about the fairness of the tax system showed only twelve percent believing it was fair and eighty eight percent believing it was unfair.
The consequence of these outrageous benefits to those who already have an excess of resources is that they also promote the idea that national investment in education and human resources, investment in technical innovation and sound infrastructure are a waste of scarce resources. Their version of appropriate national incentives is driven by an intense desire to gut investment in the future based on basic research and the central importance of our transportation and infrastructure system. Essentially, Republican policies have hugely empowered the financial oligarchs while undermining the participation of the overwhelming majority of citizen stakeholders in the process. They promote no version of a national common interest and see only the vista of narrow special selfish interests. Greed is king. They attack labor unions, promote the replacement of labor with technology and export jobs abroad because foreign labor is cheap. American labor is a liability. It is too expensive for the oligarchs. Hence, their mantra about jobs is “send jobs abroad.”
The rule of government in seeking to moderate the concentration of wealth and power in the few was well expressed by the political genius of the last century, Ronald Reagan. The government is the problem, is the enemy because it is the critical restraint on the unfettered power of economic oligarchs (the new Plutocrats). Now at present the agenda appears to be clearer: do what we need to do to keep our wealth and get more of it. Demonize the government as a moderator between extremism and the people; extinguish the opposition such as the labor unions and the independent media and most critical of all, no taxes on the rich.
Probably the most impressive victory of the financial oligarchs was their promotion of the economic theories of neo-liberalism. The center point of this approach was to oppose any and all government regulation. The great success was the deregulation of the financial sector. With the financial benefits which they acquired through a non-regulatory state, they could use their bounty of wealth as a base of power to control a good deal of law making, and they did. Their successes have permitted a huge scale of financial manipulation in a no-financial rules context, which context they in effect purchased. This was a good financial investment.
After the Citizens United case, a major Supreme Court blunder, the corporate sector could now begin the process of purchasing the government without spending limits. In short, the Supreme Court solidified the nexus between wealth concentration and its capacity to control the government in an almost complete form. One illustration of many will suffice. Big Pharma was able to squeeze a trillion dollar boondoggle out of the government by the Republican drive to block the government from bargaining with Pharma about the price of drugs. The Republicans have their eyes on other temptations such as Medicare, Medicaid, and Social Security. What is it that drives the Republicans to destroy highly popular social safety nets?
The answer to the above question is to be found in the longstanding Republican nightmare called the New Deal. The New Deal produced popular policies and its political success was reflected in Roosevelt being elected four times. After his death Republicans considered that the New Deal was popular and an important base of power for the Democrats. The problem they confronted was that the New Deal programs were popular and could not be directly attacked. Their agenda focused on foreign fears and anti-communism. However, the lingering fear of New Deal institutions was finally frontally assaulted by the brilliant, Ronald Reagan. Reagan had the insight that the New Deal worked only so long as the government could pay for it. The critical Republican strategy would now be to run up huge deficits so that there would be no funds to pay for New Deal programs. Moreover, if the Democrats came back to power, they would find that there is no money in the state bank to fund their programs. So fiscal conservatives like Reagan and Bush ran up huge deficits, and borrowed billions which they could now distribute as governmental socialism to Republican business and defense interests. This left us with a deficit nightmare and a mighty recession.
With a great deal of political amnesia Republicans now proclaim the morality of living within our economic means. You can’t spend funds if your bank account has no funds in it. They are the architects of this approach and the creators of the monumental deficit. Few heard from the deficit hawks during the Bush spending spree, fueled with money borrowed from China. We still do not hear the Republican leadership willing to acknowledge this budgetary scam. In the meanwhile, our nation is in a spiral towards radical inequality and a diminishing of our national values. Perhaps our economic oligarchs should be reminded of the wisdom of Alexis de Tocqueville who saw the key idea behind the American genius as “self-interest properly understood.” By this he meant that by taking care of your own self interests you simultaneously express a concern for the other person’s self interest as well.
What is needed is not more neo-liberalism, but more public and private investment in human capital. It is human capital that is the source of American genius and prosperity. To fully empower human capitalism, we need freedom of opportunity and not radical inequality. Freedom of inequality makes possible the development of human capability and genius, the true source of wealth in a progressive America. Perhaps the Republicans will see the true genius of American freedom.
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