One had to chuckle after reading Jed Lewison’s article “President Obama plagiarizes Mitt Romney’s economic pledge … two years ahead of schedule” mostly because it reads like poetic justice. It seems Obama has been able to fulfill Republican policies. He does them with a twist of our Democratic values. It is also ironic that President Obama’s economy has outperformed Reagan’s economy with absolutely no fanfare.
Last week President Obama gave a speech highlighting all the economics accomplishments of his administration. They are real. He was frank in highlighting a sad reality. While in the aggregate his numbers surpasses those of most presidents, most of the gains for his accomplishments went to a select few. He knows the game is rigged. We know the game is rigged.
Unfortunately, given our corporatized economic system with a bias towards capital, President Obama is powerless. Absent a revolutionary change in our economic system math is against the working middle class.
Corporations constantly tell Americans that they need predictable policies. They need some level of consistency from government. They want lower taxes or else they will go to countries that offer lower taxes and fewer regulations. They want little if any regulation that allow them absolute free will in choices. In other words they want a path laid out so that they can make fiscal decisions predictably and un-obstructively.
Corporations never seem to understand that their employees as well need some sort of predictable policies. Employees want to be able to make financial decisions for their families in a predictable manner as well. How much will healthcare cost? What types of raises can they expect in the aggregate? How many hours can they count on working in order to plan for family stability?
Corporations have a fiduciary responsibility to their shareholders not to their employees. Their first objective is to maximize the profits of the shareholders through increased dividends and stock appreciation through profit maximization.
In an economic system where the corporation has no legal responsibility to the employee (especially in ‘right to work’ states), the employee by definition is a commodity. The employee is simply another expense. Want to maximize profits for the shareholder? Depreciate the employee or use a cheaper model.
Employee depreciation has been occurring for decades as outsourcing and offshoring have been used to get cheap labor or force cheap labor at home for low skilled workers. With the advent of the Internet and improved logistics, oceans and large land masses separating producers of products and services to consumers are no longer problems. Professions that were once immune to outsourcing are no longer safe. X-Rays can be read cheaper in India. A Vietnamese or Brazilian design engineer is just as good as an American engineer. Calls centers can be in any corner of the planet.
Every policy currently presented by President Obama or by most progressives are at best a band aid. It will buy the system a few decades. It is a rather simple math problem. Most of the capital is owned by a few. Capital appreciation is taxed at a lower rate than wages. The Capital of most of the rich on average grows at a faster rate than the economy at large. Applying real world numbers show that more and more of the growing pie goes to the few. Math guarantees that eventually only crumbs are left. As Richard Wolff explained, the semblance of prosperity was accomplished with stagnant wages through credit. The shrinking pie was not immediately obvious. When credit runs out, reality sets in. The crash occurs.
So what is the solution? Math. Our economic system is biased against the middle class. It does not reward those who actually produce. It rewards a privilege few who got acceptance implicitly or explicitly into the capital markets (mostly through inheritance or capitalized invention of some product or service).
Many believe they are entitled to unlimited wealth. That is false. We play by the rules of a man made economy. Those rules currently allow for unlimited wealth without regards to the effects on society as a whole. Those rules must be changed in a manner that benefits society as a whole while not stifling the will to innovate. We know this is possible because America is still one of the most innovative countries. We also know that bankers and investors do not innovate or create anything of value yet they are the wealthiest. The reward model must change. Most of the innovation in our country comes from regular middle class scientists, engineers, doctors, cooks, and others like you and me.