I have several bloggers on the left that I regularly follow. Sometimes they’re a little over the partisan top but I am generally able to separate the nuggets of truth from the red meat. Here’s David Atkins discussing the difference between an asset economy and a wage economy. He’s not placing blame only on Republicans but policy makers in general since before Reagan. Both Atkins and David Dayen over at FDL work hard, I think, to understand what’s going on without blinders to their own side’s shortcomings and both do a good job of analyzing policy and the repercussions. Of course in the interest of moderation I’ll say they don’t always get it right but I think they do a lot of research and thought before throwing up any “ole thang”.
It would be comforting in a way to think that most every public official in Washington were eating luxurious dinners while rubbing their hands in glee at how best to destroy American families to benefit corporate contributors, so that those same public officials could buy houses in the Hamptons and eat filet mignon every night. Then it would just be a question of rooting them all out and putting “good” people into office. But that’s not really how most people, including elected officials, operate. Some are overtly corrupt to be sure, but a large number of them think they’re doing what they do for the right reasons.
I think this is true in the same way I believe my opponents on the right, you know who you are, believe in both their support of our heavily subsidized capitalist system and their prescription to bring us back from the economic precipice we’ve been on for three years now. Sure there are men and women in government and private markets who are only interested in their own bottom line but I’m hoping that most Americans would want to see a prospering economy and citizenry.
The real bipartisan agenda can be neatly summed up in this much overlooked but central Ronald Reagan quote from 1975:
“Roughly 94 percent of the people in capitalist America make their living from wage or salary. Only 6 percent are true capitalists in the sense of deriving income from ownership of the means of production…We can win the argument once and for all by simply making more of our people Capitalists.”
Understanding this idea is the key to understanding what is happening in America today, without resorting to Snidely Whiplash caricatures of elected officials.
Obviously policy makers thought by expanding home ownership, access to easy credit and inexpensive imported goods, and investing retirement funds in the market would lift us all. Unfortunately, it didn’t work out all that well for most of the middle class, regardless of how many refrigerators or tech gadgets they own.
The bipartisan idea from a public policy standpoint was not simply to enrich the wealthy at the expense of the middle class. The idea was to make the American middle class dependent on assets rather than wages.
On its face, the idea is insane. In a capitalist system, assets do often rise in value. But they also decline, and often sharply. Without significant wage growth and redundancies in the economy that provide stability at the expense of efficiency for asset growth, the popping of economic bubbles produces Great-Depression-style economic pain. The only way an asset-based economy can work is if assets grow reliably forever into the future. Not even the most “pro-growth” policies can promise that. In fact, those policies usually inflate bubbles that ensure just the opposite.
When policymakers attempt to privatize Social Security and Medicare, they aren’t necessarily supervillains hoping to turn America into a nation of nobles and peasants. Some are, but not all. The objective is to convert what they see as “useless” money sitting in the financial equivalent of a freezer, and put it to “productive” use in asset investments.
I think this is an important point and when I or others say that asset captitalists such as Pete Peterson are anxiously waiting to invest SS taxes paid by Americans into private investment opportunities this is what we mean. Many of us don’t believe this will work out very well for the little guy.
The recklessness and stupidity of this sort of approach to public policy should have been proven by the 2008 financial crisis that saw the rapid destruction of asset values in stocks, bonds, and housing. Predicating economic health on asset growth is a pipe dream: most people will never have enough assets to make it work, and asset growth is far too unstable to serve as the basis for a functional economy.
I think his conclusion is something to think about but I don’t see any real change in direction on the horizon so in the meantime, I’ll just try to protect our assets and push for a change in policy makers.
America will only return to real economic health when the asset-crazed insanity of the last 30 years is brought to heel, and America returns to a public policy that is far more interested in wage growth and economic stability than it is in asset inflation. Until then, we can expect continued political and economic shocks from an angry electorate and an economy that has run off the rails due to 30 years of deeply misguided anti-inflation, pro-asset-growth ideology.