The Future Is Now
by William Greider

<http://www.commondreams.org/views06/0610-21.htm>http://www.commondreams.org/views06/0610-21.htm
Published on Saturday, June 10, 2006 by The Nation


Momentous change is approaching in American politics. Conceivably, the
turning point has already arrived, too indistinct to recognize. We are
witnessing the demise of the reigning economic ideology. A deep shift of
this kind is a very rare event, one that comes along only every thirty or
forty years. Economic disorders accumulate that the orthodoxy cannot answer
and may even have caused. Eventually, the ideological presumptions are
discredited by real-world contradictions.

The last time this happened was in the 1970s, when economic liberalism
foundered and collapsed. Ossified intellectually, unable to adjust to
changed circumstances, the liberal order did not know how to deal with
economic consequences like inflationary stagnation. As the long postwar
prosperity lost its energy, so did liberal politics.

Something similar is happening now to the Republicans. Their problem is the
underperforming economy, which must borrow to stay afloat and, roughly
speaking, lifts only half the boats. The conservative order--inspired two
generations ago by Milton Friedman and Friedrich von Hayek and brought to
power by Republican ascendancy--pushed government aside so business and
capital would be free to generate more lasting prosperity. But their
utopian promise was not fulfilled. Instead, the right's principal product,
one can say, was economic inequality.

The breakdown won't necessarily produce an immediate shift in power. When
the bottom fell out of liberal doctrine thirty years ago, what first
unfolded was confusion and political paralysis, then an awkward retreat by
the Democrats until they were finally displaced by the aggressive new
conservatives under Ronald Reagan. But it does mean that Republicans have
lost the political cohesion to advance their more extreme measures
(privatizing Social Security, freeing capital entirely of taxation).

More to the point, the way is now open for alternative thinking: the new
ideas that can lead to a new governing order. These ideas must be grounded
in a determination to give people back their future. The strange paradox of
our times is that despite America's fabulous wealth, most people's lives
are shadowed by economic anxieties and real confinements, the wounds that
market ideology has imposed. They fear that much worse is ahead for their
children. Reform must re-establish this fundamental principle: The economy
exists to support society and people, not the other way around. Only
government can liberate them from the harsh rule of the marketplace, the
demands imposed by capital and corporations that stunt or stymie the full
pursuit of life and liberty in this complex industrial society. This very
wealthy country has the capacity to insure that all citizens, regardless of
status or skills, have the essential needs to pursue secure, self-directed
lives. This starts with the right to health, work, livable incomes and
open-ended education, and to participate meaningfully in the decisions that
govern their lives. The marketplace has no interest in providing these. It
is actively destroying them.

A coherent alternative agenda that will fulfill these principles does not
yet exist. Nor will a liberal-progressive program emerge miraculously if
the Democratic Party should somehow regain power in the next few years,
since many Democrats in Congress have internalized the market ideology and
collaborate with the right. But elements of that alternative agenda are
already ripe for discussion. Before we explore some of them, however, we
should examine the economics of why the right failed.

History's Goat

The economic engine is running on empty. It looks robust only if you ignore
the underlying conditions. Household savings were negative last year for
the first time since 1933; that is, families kept up by spending more than
they earned and by borrowing to do so. The national economy, encompassing
private-sector business and government as well as households, also had
negative savings in the fall quarter of 2005, despite bountiful corporate
profits.

The household accounting reflects a common reality: Wage incomes, adjusted
for inflation, are stagnant or falling. The weekly wage for 92 million
people in nonsupervisory jobs (82 percent of the private-sector workforce)
has declined for three consecutive years, largely because total working
hours shrank across the economy. Even per capita income--a broader measure
that includes the billionaires--declined for four years in a row under
Bush. One in six manufacturing jobs has been lost since 2000 (39 percent in
communications equipment, 37 percent in semiconductors). These losses are
explained as free-market "efficiencies" but mainly represent the global
relocation of American production.

The cumulative effect is an economy that doesn't produce enough to pay for
what it wants and needs. The conservative order, notwithstanding its
proclaimed values, makes up the difference by borrowing. In five years,
Bush has added $2.5 trillion to the federal debt with more to come (thanks
to his regressive tax cutting, deficit spending, the war in Iraq and the
subpar economy). In the same five years, the national economy as a whole
took on even more debt--$2.9 trillion--to pay for the ever-swelling trade
deficits. The creditors are our trading partners, led by China and Japan.
The collective indebtedness is growing much faster than the nation's
collective income--always an ominous sign for a debtor. George W. Bush may
wind up as history's goat because he had the bad luck to inherit the
effects of twenty-five years of rightward governance (including Bill
Clinton's tenure). Government shifted tax burdens downward, favored
military spending over productive domestic investment, encouraged
multinationals to disperse jobs and production overseas and embraced the
Federal Reserve's hard-money monetary policy, which suppressed
working-class wages. Fortunes were shifted upward, fabulously.

The era produced a great ideological irony: Starting with Reagan, the right
repeatedly finessed its contradictions with debt--the borrow-and-spend
"sin" they once assigned to liberalism. In 1981, Reagan's first year as
President, the federal debt surpassed $1 trillion for the first time ever.
Twenty-five years later, despite fiscal restraint under Clinton, the
federal debt has surpassed $8 trillion.

The Republicans now find themselves in a corner with no good choices. If
Bush withdrew the stimulus of federal deficits, economic growth would
collapse. The sensible course would require a massive shift in
priorities--moving money and benefits from the wealthy few to the
struggling many--but that is ideological heresy and would double-cross the
GOP's monied patrons. Bush could confront the huge trade deficits by
imposing unilateral limits on imports, but that is also a humiliating
heresy he won't touch. So conservatives are likely to muddle on, hoping the
economy will somehow work itself out of its weaknesses. Progressives should
get busy now developing alternative ideas for the major shift that must
inevitably follow.

For Life and Liberty

You wouldn't know it from reading the newspapers, but substantial and often
overwhelming majorities of Americans have repeatedly endorsed governing
concepts that conventional politicians dismiss as radical or unrealistic:
Universal healthcare. A job for everyone who wants to work, guaranteed by
the government. Secure retirements. Stronger enforcement of environmental
laws. Stronger defenses against encroaching corporate power. Union
protection for workers against exploitative employers. The list goes on.
These widely endorsed goals assume an activist government that nurtures
people and society first, ahead of corporations and capital. Imagine a
political agenda that sets out to give the people what they say they want.

The heart of the problem is the deterioration of work and wages. There are
many other elements damaging the pursuit of life and liberty; but as
old-school liberals always understood, if wages and working conditions are
not moving in the right direction, you won't accomplish much toward healing
other social injuries and disorders. What follows is a short list of
provocative ideas meant to stimulate imaginations.

§ Repair wages. This should start with government acting as the "employer
of last resort" and involves a large and permanent program of federally
financed jobs, open to anyone ready and willing to work and closely
integrated with skill training and education. For most workers, the public
jobs would be temporary, a safe harbor until opportunities improve in
private employment. What might the people do? Any work that helps address
the vast inventory of unmet public needs--a broad program of public
investment that rebuilds neighborhoods, reclaims ruined ecosystems or
restores production. Local citizens and governments would choose the
priorities, not Washington.

The most dramatic benefits would obviously accrue to the poor--injecting
jobs with reliable (and legal) cash incomes into desolate urban and rural
communities, a financial platform to stimulate private enterprise and
redevelopment. Young people could hold part-time public jobs, conditioned
on staying in school, and bring cash home to the family, while getting
hands-on experience and productive skills--a powerful alternative to
dead-end lives. The federal job guarantee would also bolster the broad
working class: a new safety net for the people displaced by recessions,
offshoring or corporate downsizing. Wages could be scaled upward for the
public jobs, based on the skill levels involved, and the displaced
industrial workers would have access to retraining.

Above all, a permanent program of public employment, properly conceived,
would boost wages. It would mop up surplus labor (about two times larger
than official unemployment) and create a new wage floor, generating upward
pressure in the labor market. In a more bountiful era, this might seem
unnecessary, even inflationary. But today's economy has things upside down:
It proliferates the low-wage service jobs that cannot sustain families,
while it gradually eliminates the high-wage manufacturing jobs that provide
middle-class incomes. Public jobs, together with a sustained campaign to
raise the minimum wage and other measures, would gradually shift the flow
of rewards in the other direction.

Employers will not like this, obviously, and will argue that rising wages
are bad for the economy--higher prices, lower profits. But is that really
so? The steady deterioration of working-class wages over the past thirty
years did not produce a healthier economy. Someone should ask working
people whether they would choose cheaper prices at Wal-Mart or better
incomes for themselves. The current labor market does indeed benefit the
more affluent Americans who have been enriched by what happened to the
price of labor. Now it is time to reverse the flow and heal the
wounded--that is, restore a balanced prosperity.

§ Deregulate labor. The destruction of worker rights (the right to organize
a union, established by the 1935 National Labor Relations Act) is a great
failure of regulatory government and a critical factor in the deterioration
of wages and working conditions. Union density has declined to 8 percent of
the private-sector workforce, yet a poll last year found that 53 percent of
workers would like to be represented by a union--if they could. The gap
between aspirations and reality is maintained by systematic and often
illegal corporate tactics that block workers from exercising their rights.

One answer might be to eliminate the National Labor Relations Board--free
the workers of regulation. Federal law and regulators are quite lame in
policing the corporate illegalities, but workers and unions are prohibited
by law from using effective tactics like secondary boycotts, sit-down
strikes occupying workplaces and mass mobilizations. A newly enacted labor
law would be grounded in constitutional rights--free speech, freedom of
assembly, the Thirteenth Amendment prohibiting involuntary
servitude--rather than politically vulnerable regulatory law.

Rethinking labor rights is another opportunity to build bridges across
class differences by creating a broader set of rights that apply to all
employees, regardless of union status. That would involve basic protections
against managerial abuses, and also new rights of self-expression and the
right to participate in decision-making within the firm. The best companies
already do this, because they know the free flow of information among
employees stimulates innovation and efficiency reforms. Labor law
effectively inhibits unionized workers from even meeting with nonunion
colleagues without the boss's consent.

Ultimately, labor-law reform should encourage an economy of worker
ownership in which employees share responsibility for the firm with
management and share more equitably in the returns. The top-down corporate
structure is a major source of inequality. Does anyone imagine that
employees, if they had a voice, would ratify the scandalous executive pay
for CEOs?

§ Tax corporate behavior. Major corporations used to be part of the liberal
social contract. They were the institutional partners that distributed
health insurance, pensions, labor guarantees and other progressive benefits
to workers and communities (reimbursed by federal tax deductions). But
during the last generation, companies have resigned from this role, turning
on their employees and extracting "profit" by expropriating the value that
belonged to their workers: wages, pensions, healthcare benefits and good
working conditions.

Government has to step in and fill the void to avert social calamity. The
old arrangement helped build the middle class, but it was never as good as
it sounded. Roughly half the country was left out. Moreover, the voluntary
nature gave managements the power to set the terms--and the freedom to
break promises--which were challenged only by unions.

Universal health insurance is the most pressing imperative because health
costs continue to soar as the burden is shifted to employees. Pensions may
become a larger crisis in the long run. The right's twenty-five-year
experiment with individual pension accounts has failed, leaving even
middle-class workers unprepared for retirement. Instead of tinkering with
the failed concept, reformers should create an entirely new national
pension: universal, mandatory savings under government supervision that,
alongside Social Security, will insure comfortable retirement for all. One
model is the pension plan already enjoyed by federal employees and members
of Congress [see Greider, "Riding Into the Sunset," June 27, 2005].

Companies need to pay, meanwhile, for their antisocial behavior. They
collect hundreds of billions in tax breaks and subsidies, yet abuse society
in return--degrading the environment and communities, ignoring the national
interest, offloading their obligations. Corporate taxation has declined
since the 1960s from more than 20 percent of federal revenue to less than
10 percent. Despite their profitability, scores of major corporations pay
zero taxes (some even collect refunds). One plausible remedy is to
refashion the corporate income tax as an important new mechanism for
enforcing corporate obligations to society. Imagine a reformed tax code
that clears away all the corrupted loopholes and sets the basic corporate
tax rate higher, at around 45 percent.

Corporations would then be able to reduce their tax liability--perhaps by
15 points or more--by demonstrating that their performance adheres to
higher social standards. Does the company, for instance, increase wages for
workers in step with its rising productivity, as economists assume, or does
it pocket the money for the insiders and shareholders? A positive record
could knock several points off the tax rate. Does the company have an
egregious history of trashing environmental laws or fraudulent dealings in
financial markets? It would be ineligible for reductions. If the company is
increasing its American workforce, augmenting pensions and healthcare,
encouraging democratic relations with employees, it could be rewarded at
tax time. This leverage would penalize bad behavior at the bottom line and
reinforce the tattered regulatory laws. The performance ratings would be
public--a "market signal" that tells investors and consumers which
companies are the white hats and which are the rogues.

§ Develop an industrial policy for essential needs. Economic deregulation
produced real economic gains, like stimulating technological innovation,
but it also fed inequality in sly ways. The deregulated system raised costs
for the least affluent, while larger business customers were able to
bargain for lower prices. Financial deregulation (enacted by Democrats in
1980) legalized usurious lending and created a large pool of families (now
around 12 million) who can't afford a bank account and get ripped off by
predatory lenders. Deregulation of electric u tilities led to Enron and the
price-rigging scandals. That sector, meanwhile, notoriously ignores its
culpability for producing global warming.

The point is, some consumer goods are too essential to be left to the
profit-seeking enthusiasms--and reckless disruptions--of private
enterprise. People need them to live and are thus always prey to
exploitation. Family finances will benefit and so will the environment if
government selectively re-regulates industrial sectors producing for
essential needs: banking and finance, energy, elements of transportation
and telecommunications, for starters.

The basic approach is restoring a franchise relationship in which firms
accept government-imposed obligations in exchange for limited competition
and an assurance of moderate profits. Market space can be preserved for
smaller, innovative firms. New rules can avoid the inflexibilities of the
old system. But the notion that corporations have a right to annex common
public assets and turn them into profitable commodities has to be stopped.
Companies are buying the water. What's next--selling us clean air?

A prime candidate for essential-needs regulation is the drug industry.
Among its many outrages, the drug companies ride free on the expensive
basic research financed by government, then convert it into private,
overpriced products--paying nothing at all back to the original financiers,
the taxpayers. If citizens ever understood this scam, they would be angry
enough to demand a nationalized drug industry. At the very least, citizens
are entitled to reasonable pricing and a share of the profits from the
medicine they paid to create.

Re-regulation of commerce also requires some rules accepted as everyday
practice in business. When government hands out public money to a company,
it should demand an enforceable contract: written agreement from the
corporate recipient about what the public gets in return and the right to
recover the money if the agreement isn't fulfilled. When government puts up
public capital for a private development as tax breaks or infrastructure,
it should get equity in return. If businesses don't like these terms, they
don't have to take the public's money.

These ideas and others can gain political traction if reformers reclaim the
language of freedom. It starts with a liberating message for people: The
failure lies in the system, not yourselves. When the conservative order
stripped away government protections for society, control was handed over
to another master--the marketplace--that is even more remote from
accountability and far less sympathetic to the human condition. That old
order is collapsing. Now life and liberty can be restored. Government helps
by creating the proper foundations. People will do the rest for themselves.