On March 7, 2014, Robert Reich writes on Nation Of Change:
Do you recall a time in America when the income of a single school teacher or baker or salesman or mechanic was enough to buy a home, have two cars, and raise a family?
I remember. My father (who just celebrated his 100th birthday) earned enough for the rest of us to live comfortably. We weren’t rich but never felt poor, and our standard of living rose steadily through the 1950s and 1960s.
That used to be the norm. For three decades after World War II, America created the largest middle class the world had ever seen. During those years the earnings of the typical American worker doubled, just as the size of the American economy doubled. (Over the last thirty years, by contrast, the size of the economy doubled again but the earnings of the typical American went nowhere.)
In that earlier period, more than a third of all workers belonged to a trade union — giving average workers the bargaining power necessary to get a large and growing share of the large and growing economic pie. (Now, fewer than 7 percent of private-sector workers are unionized.)
Then, CEO pay then averaged about 20 times the pay of their typical worker (now it’s over 200 times).
In those years, the richest 1 percent took home 9 to 10 percent of total income (today the top 1 percent gets more than 20 percent).
Then, the tax rate on highest-income Americans never fell below 70 percent; under Dwight Eisenhower, a Republican, it was 91 percent. (Today the top tax rate is 39.6 percent.)
In those decades, tax revenues from the wealthy and the growing middle class were used to build the largest infrastructure project in our history, the Interstate Highway system. And to build the world’s largest and best system of free public education, and dramatically expand public higher education. (Since then, our infrastructure has been collapsing from deferred maintenance, our public schools have deteriorated, and higher education has become unaffordable to many.)
We didn’t stop there. We enacted the Civil Rights Act and Voting Rights Act to extend prosperity and participation to African-Americans; Medicare and Medicaid to provide health care to the poor and reduce poverty among America’s seniors; and the Environmental Protection Act to help save our planet.
And we made sure banking was boring.
It was a virtuous cycle. As the economy grew, we prospered together. And that broad-based prosperity enabled us to invest in our future, creating more and better jobs and a higher standard of living.
Then came the great U-turn, and for the last thirty years we’ve been heading in the opposite direction.
Why?
Some blame globalization and the loss of America’s manufacturing core. Others point to new technologies that replaced routine jobs with automated machinery, software, and robotics.
But if these were the culprits, they only raise a deeper question: Why didn’t we share the gains from globalization and technological advances more broadly? Why didn’t we invest them in superb schools, higher skills, a world-class infrastructure?
Others blame Ronald Reagan’s worship of the so-called “free market,” supply-side economics, and deregulation. But if these were responsible, why did we cling to these ideas for so long? Why are so many people still clinging to them?
Some others believe Americans became greedier and more selfish. But if that’s the explanation, why did our national character change so dramatically?
Perhaps the real problem is we forgot what we once achieved together.
The collective erasure of the memory of that prior system of broad-based prosperity is due partly to the failure of my generation to retain and pass on the values on which that system was based. It can also be understood as the greatest propaganda victory radical conservatism ever won.
We must restore our recollection. In seeking to repair what is broken, we don’t have to emulate another nation. We have only to emulate what we once had.
That we once achieved broad-based prosperity means we can achieve it again — not exactly the same way, of course, but in a new way fit for the twenty-first century and for future generations of Americans.
America’s great U-turn can be reversed. It is worth the fight.
During the age of labor-intensive contributions to the process of producing goods, products, and services it is true that America created the largest middle class the world had ever seen. Robert Reich accurately describes the state of the political economy in times past.
This was a time of “full employment” with jobs paying decent livable wages due to the bargaining power of unions to demand better wages, working conditions and benefits from corporate owners who were “dependent” on labor for the production of their goods, products, and services. But as tectonic shifts in the technologies of production began to put more of the contribution to the process on the non-human factor of production, labor workers lost bargaining power because they could be eliminated by advanced tools, machines, super-automation, robotics, digital computerization, etc. Today and into the future, this shift will intensify with most economic value created by the non-human factor, which without reform of the monetary and finance system will continue to owned by fewer and fewer people.
When the American Industrial Revolution began and subsequent technological advance amplified the productive power of non-human capital, plutocratic finance channeled its ownership into fewer and fewer hands, as we continue to witness today with government by the wealthy evidenced at all levels.
The resulting impact of our current approaches has been plutocratic government and concentration of capital ownership, which denies every citizen his or her pursuit of economic happiness (property) as originally envision by the founding fathers of our country.
At present, there is a brewing power struggle going on in the United States between individual human beings (citizens) and the plutocratic powers who manipulate our government and the would-be plutocratic powers (top corporate executive managers and financial barons). What the 99 percent movement should advocate is returning America to economic democracy. If we do not achieve economic democracy, then plutocracy will lead to fascism—the ownership of productive capital by the rich and by their institutions.
At one point in 1976, the discussion led to The Joint Economic Committee of Congress endorsing the two-factor policy to broaden capital ownership as an economic goal for America. The 1976 Joint Economic Report stated: “To provide a realistic opportunity for more U.S. citizens to become owners of capital, and to provide an expanded source of equity financing for corporations, it should be made national policy to pursue the goal of broadened capital ownership. Congress also should request from the Administration a quadrennial report on the ownership of wealth in this country, which would assist in evaluating how successfully the base of wealth was being broadened over time.” Unfortunately the Congress has never paid any attention to this policy, and the goal has subsequently been unacknowledged and unheeded by our plutocratic political leaders.
We should demand to know why there is no Department of Ownership.
In order to return to a system of broad-based prosperity we must restore our founding fathers’ principles and recognize that we cannot have political democracy without economic democracy, the foundation of what we once had.
In order to once again achieve broad-based prosperity means that we must reform the system and create a new way, the JUST Third Way, designed to prohibit monopoly ownership of productive capital and broaden personal ownership of FUTURE wealth-creating, income-producing capital assets in this century and for future generations of Americans.
Support the Agenda of The Just Third Way Movement at http://foreconomicjustice.org/?p=5797, Monetary Justice at http://capitalhomestead.org/page/monetary-justice, and the Capital Homestead Act at http://www.cesj.org/homestead/index.htm and http://www.cesj.org/homestead/summary-cha.htm.
