One of the favorite firebombs flung by the right against the left in America’s idiotic ideological warfare is the word “socialism.” Proposals to improve the general welfare by addressing corrosive economic inequality are routinely castigated and dismissed by chronically cranky right-wingers as “socialist.”
If something works to foster general prosperity and mitigate socially destabilizing economic imbalances, what does it matter what it is called?
Rather than tie down every economic issue confronting our nation onto a socialist/capitalist ideological rack, let’s objectively consider how we can organize our economy to work for the benefit of the vast majority of participants. That exercise need not be limited by arbitrary labels hurled about as pejoratives.
Many advanced democratic countries are not devoted to any one economic ideology. They adjust their economic systems to find a rational, workable mix of polices that includes what could be labeled “socialist” and “capitalist.”
In America, capitalism, particularly free-market capitalism, has been enshrined as an essential element in the national gestalt — the land of opportunity, the free pursuit of happiness, self-reliant individualism, etc. Capitalism’s sacrosanct standing in the national psyche is equivalent to that of religion — therefore resistant to objective examination.
The reality of America’s version of free-market capitalism is that it has increasingly become an economic system that works to sustain the position and privilege of an economic aristocracy for whom the efficient use of capital includes purchasing political favors that maintain their status and advantage, and protects their virtual monopolies.
A system that concentrates wealth in a few and inhibits competition does not expand opportunity nor lend itself to social stability. It fosters a merciless economic jungle where people can be ruined by a single misfortune.
Who, then, can blame folks for fearing the loss or interruption of their livelihoods even if to combat a deadly pandemic or address climate change?
Many Americans are only a few paychecks away from living on the streets. And, for many, the loss of employer benefits, particularly health insurance, threatens financial ruin.
No wonder that there is stiff resistance against efforts to stop extracting fossil fuels, cutting down forests, harvesting fish to extinction and restricting other industrial activities causing environmental degradation. They employ people.
To survive, let alone thrive, in America’s economic jungle there must not only be equal opportunity but also adequate income and financial security, enough to weather life’s potential setbacks.
But, for most Americans that is difficult to attain. The Monopoly board is not level.
Data from both private and government sources consistently confirm America’s profound economic inequality. The top 1 percent of American households now control more than 38 percent of the nation’s wealth, while the vast majority (70 percent) of the remaining households, control just 9 percent of its wealth.
The median wealth of the bottom 20 percent of households is $4,715 — not much of a cushion to weather life’s potential misfortunes, especially medical. Meanwhile, the median wealth of the top 20 percent is $554,700.
For the next 20 percent it’s $188,300, dropping even more precipitously down the next two quintiles.
Annual household income is similarly skewed. For the bottom 20 percent the average is $15,236, while for the top 20 percent it is $254,449. The government considers household income below $25,000 to be poverty. That might not be considered impoverishment in the third world, but in America it is.
Not everyone can be or has to be rich, but there should be a fair chance to have enough to afford a reasonably comfortable life.
And here is where the anger and disaffection arise. The hungry have their noses pressed against the restaurant window, watching the well-fed inside gorging themselves. The top 20 percent of American households have net worth and income that afford them a lifestyle vastly and visibly different from that of the remaining 80 percent.
The left likes to focus on white nationalism as being the driving force behind former President Donald Trump’s right-wing nuttery. But, that moral preening about race distracts from the greater driver of Trumpism, which is the pervasive pressure and anxiety that growing income inequality and economic insecurity places on the daily lives of so many Americans.
The Democratic Party is certainly not without complicity in this. Joining the Republican Party to bail out the 1-percenters who caused the Great Recession while mostly neglecting the ordinary Americans who were the victims of it, is one glaring example of the Democrats’ complicity in too big to fail versus too small to matter.
The overlap between Bernie Sanders supporters and Trump supporters is explained by the economically disaffected looking for any champion to improve their lot.
Trump took full advantage of their anger and angst to sell them a lopsided tax cut, an anti-immigrant narrative, and to push anti-welfare and anti-Obamacare arguments as “socialist” schemes ushering in tyranny that will confiscate their guns and burn their Bibles.
The vexing irony is that most Trump supporters would be the greatest beneficiaries of a fortified social safety net and policies that reverse the pathological flow of wealth to a small percentage of the population.
If ethical, rational Democrats and Republicans want to douse incendiary domestic extremism they must tackle economic inequality. It is a failure of government that an economic underclass grows larger, poorer and more disaffected.
Economists have identified three main causes of extreme wealth inequality.
» Wage stagnation. Over the past 40 years, top-executive compensation has skyrocketed while the pay of workers down the org-chart has hardly budged. Full-time, permanent jobs with health insurance are being replaced with the gig-economy and multiple part-time jobs.
» Trickle-down economics. America’s tax structure is heavily skewed to favor the wealthy via lowered rates, generous targeted deductions and subsidies. That dividends and capital gains are taxed at lower rates than employment income, helps wealth flow up more than trickle down.
» Monopolization. In addition to lax enforcement of regulations over corporate mergers and acquisitions, every recession is the opportunity for the wealthy to buy up assets at fire-sale prices, then put those assets to work earning them money in an environment of less competition. Eventually, more and more wealth is amassed by fewer and fewer people. Small businesses and economic opportunity diminish.
What could be done to level the Monopoly board and defuse economic disaffection?
Institute universal health care. It is the cornerstone of an effective social safety net. It not only eliminates a tremendous cause of economic anxiety but also emancipates employers from the health insurance obligation.
Make college education affordable and prohibit predatory lending for it.
Promote the establishment of excellent trade schools. We need more plumbers than lawyers.
Refurbish and expand our nation’s infrastructure. Everyone’s economic welfare and opportunity rely on it.
Increase the minimum wage and use the tax code to discourage gluttonous executive pay.
Increase tax rates on the top income earners, end most subsidies and tax investment income as ordinary income.
Purge the regulatory agencies of industry insiders. They are foxes put in charge of the hen house and have done little to curtail monopolization. Enforce and reinforce regulations on the financial sector to curb the insatiable greed that preys on the public and precipitates economic calamities.
Most of the advanced democratic nations on earth have taken such measures without jeopardizing democracy, freedom or free enterprise. Instituting such policies in America isn’t going to lead to gulags, a police state or destroy capitalism any more than did Social Security, Medicare, the Interstate Highway System or public education.
Promoting the general welfare through greater opportunity, wider wealth distribution and a reliable social safety net won’t discourage entrepreneurialism or investment. The desire to accumulate wealth will not be diminished. No one is going to pass up making millions or billions of dollars because it might be harder to make tens of billions.
— Randy Alcorn is a Santa Barbara political observer. Contact him at email@example.com, or click here to read previous columns. The opinions expressed are his own.