Press "Enter" to skip to content

Enough Tired Theory

Why Economic Policy Should Account For Conditional Realities

In Saving Capitalism: For the Many, Not the Few, Robert Reich uncovers just how sharply intransigent and distressingly rigged the “rules of the game” are in our economy. The incontestable truth that mechanisms, laws, and regulations governing our socioeconomic ecosystem are strictly perquisite to the wealthy while disproportionately destructive to more than just the bottom half of the income distribution. Historically Republicans and Democrats both shoulder uneven blame for their respective policy initiatives, but ultimately we ended up here—with the gasoline-tinged flavor of “re-regulation” that benefits the select few who stand to gain (even though Republicans tout the perils of big government to justify deregulation) from economic exploitation. This economic exploitation is made possible by the fact that America is a corporate-controlled economy, subject to minuscule oversight. So from the studio that brought you box office hits like, The Koch Brothers, Private Equity, Private Health Insurance, and Killing People in the Middle East for Oil comes an economy by which corporations are endowed with more power since the legal inception of, well,  the corporation. Corporations today enjoy the gift of personhood (yet subject to lower tax rates than individual persons), awarded mercy during bankruptcy, and slaps on their wrists for violating serious federal laws—which is simply accounted for as a mere cost of doing business. We need to reimagine the role corporations should play in our economy and should be agitating for deconcentrations of power. We should be demanding a continental shift in how much influence corporations should have in shaping our lives.

Is total dominance of industry and control over capital the new normal?  Arriving at this paradigm was by no means a matter of unsighted coincidence, and economists argue that our current condition is a result of political choices made (and not made), fully cognizant of consequences (or not). These policies implemented over the past forty years claim provenance from the so-called “neoliberal revolution,” a uniquely American campaign embodying the strong conviction “that market competition is the most efficient method of allocating any resource, and therefore should be introduced into every sphere of life.” In practice this means serval things, but the operative reason is that technocratic practitioners of the flawed free-market dogma have ceaselessly naturalized the most ruthless shibboleths of marketization (and lawmakers have been more than willing to heed the advice of such “experts”). Dangerous economic rhetoric historically leads to misaligned and unjust market outcomes, but is also symptomatic of a libidinal antipathy to anti-poverty measures. Blame neoliberal beliefs in the moral hierarchies of wealth, self-correcting markets, and the illusions of economic choice. Defenders of this reasoning cannot imagine a world in which value is measured beyond an individual’s productive capacity. Observe in the cult-like machine language language of “trading off” efficiency and equity: We would just love to help the poor but giving them money would only incentivize them to carry on relying on nothing but public assistance as a crutch, further hemorrhaging precious tax resources. They just need to “pick themselves up by their bootstraps.” My personal favorite is “a rising tide would lift all boats.” Obviously not everyone has a pair of boots…or a boat. 

https://inequality.org/facts/income-inequality/

The main idea is that our corporate economy has rewarded ruthless profit-seeking, prioritized tax cuts, hollowed out antitrust enforcement, and cut social safety net programs for our most vulnerable citizens. With a new imagination about the role firms should play in our economy, policymakers can make better informed decisions by viewing the economy as a dynamic ecosystem in which socially influenced human beings run the show. After all, the economy doesn’t exist as some ontological abstraction outside of our consciousness, we as humans make it up in our daily interactions and transactions. Once we focus economic policy to reflect conditional realities of human activity—not as immutable laws of nature in which only rational market actors exist—only then can we fix our economy, achieve human flourishing, and prioritize equity over growth fetishism and efficiency.

In a sweeping and lucid policy brief, Nell Abernathy, a former Fellow at the Roosevelt Institute, shows why rejecting the surviving wisdom of how firms function in our society is so necessary. She proposes that not only is allowing private enterprise to dictate the terms by which they’re allowed to operate dangerous and harmful to our collective democratic power, but that contrary to popular belief, it’s also unproductive for the economy. Take tax cuts for example. The Trump Administration is a genuine believer in the widely debunked pseudoscience of trickle down economics; that tax cuts for the wealthiest Americans will translate to more prosperity from the top down in the form of more jobs, which is said to then translate to more paychecks, therefore more money going to the working and middle class, therefore more spending, therefore more growth (the classic allegory of the horse-and-sparrow theory). “Because this theory of the firm claims that gains at the top automatically grow the economy and create jobs by trickling down, efforts to regulate or tax the top—even for popular redistributive programs—are seen not only as an unfair confiscation of property, but, by eliminating the incentive for businesses to invest, as harmful to average Americans.” Abernathy’s assertion, much aligned with Reich’s, gut punches any argument the Right and Republicans alike have in favor of the virtues of leaving firms the hell alone (abolishing “big government,” whatever that means) and swooning over those sweet productivity gains.

There is a notion, a common and dangerous misconception, about how firms operate daily and how inherently necessary their conduct is for the rest of society to function properly. Proponents of fiscal responsibility and enemies of safety nets alike often grossly overlook the fact, despite what cable news and Koch-funded think tanks propagandize, that corporate welfare is the key issue, and that corporations are the actual bloodsucking parasites—not “welfare queens” sucking dry our precious tax resources. It’s also completely laughable whenever anyone one the conservative Right argues how when the rich commit tax evasion and defraud the federal government by shifting their money to offshore havens they are just finding loopholes. When the most vulnerable need a safety net, they’re immoral poors who just didn’t major in the right thing in college and deserve to wallow in poverty yet simultaneously don’t deserve the necessary help. Abernathy writes, “If you subscribe to this story,” the story of the automatically benevolent and well-intentioned CEO free from the fetters of government intervention, “then unleashing self-interested businesses and rich people from the constraints of government appears to be both productive and moral.” No doubt the deep-seated anti-tax, anti-government death cult of Americans contributes to a hostile environment for an egalitarian socioeconomic arrangement to take precedent.

Antitrust is resurgent issue in the crosshairs of the American Right and one way by which the economic system can be partially but not insignificantly un-fucked. Antitrust laws were designed to provide oversight and accountability going toe-to-toe with enormous concentrations of private power. They’re also meant to maintain democratic, collective representation. For example, the law is the puppeteer defining the legal parameters by which companies like Amazon can exercise their political will and conquest of an industry. Amazon is one avatar of special interests with outsized economic power. Amazon has the time, money, and resources to effectively lobby congress for preferential treatment in the tax code, etc. Amazon influences laws to be precisely engineered to favor them, and that outweighs the representative collectivism and subsequent bargaining of our citizenry. In this way, the rules of our economic game are again seen as rigged against us by erecting insurmountable barriers to worker protections and labor rights for average Americans. Supreme court judges would be wise to understand how the flawed economic pillars of free-market neoliberalism don’t work or actually beneficial in any measurable way for anyone besides the ultra-rich. Again, the economy is made of up individuals being actively stripped of protections and economic security as a direct result of ignoring modern realities of the consequences of fetishizing growth and by putting sociopathic faith in markets being self-regulating. This is in stark contrast with the very ideal of rationality, an abstract idea of humanity behavior pinned against how those with power actually operate.

In the end, everything is terrible. But the good news is that I, like Reich, Abernathy, Zucman, and Saez, and many others believe that a better future is possible once the public has their version of a come-to-Jesus epiphany. Once we put power back into the hands of ordinary citizens, we can finally signal to lawmakers not only that private enterprise and capitalism are literally killing us, but that the rotting market fundamentalism that informs the law allowing them to do so should be based on conditional realities of every day market participants, not flawed theory.

Comments are closed, but trackbacks and pingbacks are open.