Saturday, November 10, 2007

The missing marbles of the "free marketeers" (In These Times -- Chris Hayes)

  • I have lately been thinking that the “free marketeers” are every bit as bereft of reality as their communist nemeses ever were and in exactly the same way: the theoretical structures of both equally ignore the impact of the same all important aspect of human nature—greed.

    The communists never appreciated the need for greed (how self-interest motivates efficiency and innovation).

    The free marketeers never understand the need to rein in greed with an adequate system of checks and balances (which hasn’t occurred naturally—that is without state intervention—since the beginning of industrialization). The belief that the oldest story of mankind—who’s going to eat whose lunch—can give way to some blind (market) mechanism is something psychologists (and rationale economists) might describe as “magical thinking”.

    (Uniquely) in America we have a deep seated, long running problem with this literally mindless ideology. It is an ideology which on an operational basis reduces all solutions to: don’t do anything about the problem ("government isn’t the solution; government is the problem"). Hopefully, we are now in a period in which America can permanently shed this literally missing-marbles ideology.

    Milton Freidman wrote that crisis is the only opportunity to change. By early 2007 (before the recent slight increase in the minimum wage), 25% of American workers were earning less than the minimum wage of 1968 (I wonder if Americans of 1968 would have seen that as a crisis if somehow they could have foreseen it). Using a realistic poverty measure, 25% of Americans could also be found living below the real poverty line (not the official—three times the price of the lowest possible food budget—poverty line) in 2007—up from 15% in 1968.

    But, Americans must “find out” about the crisis first. The number one way to alert them could be for progressives to construct a realistic poverty line (a “Plan B” poverty line—the formula found in the 2002 book Raise the Floor sounds perfect) and to begin to refer to the realistic line in all their writings and attempt to get the media to follow suit (at least as an arguable alternative). Once Americans wake up to find out that poverty is approaching doubling since the LBJ began the war on poverty (even as average income doubled) a new national conversation will be on.

    Then it may be time to note that in 1972 the top 1% of earners took in only 7.6% of overall income; by 2001 it was 17.6%, by 2005 22.5% and to wonder when it will reach 27.6%—that sounds like a crisis…

    ...for which there is a very simple solution: legally mandated, sector-wide collective bargaining (or some equivalent like the French system where all firms work under conditions agreed to by unionized firms)—the perfect, permanent checks and balances solution to the super bean counter management used all over the better paid OECD world.

    United States Posted by ddrew2u on Nov 10, 2007 at 10:15 AM

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