The Predator State - End of the Free Market
The Predator State
How Conservatives Abandoned the
Free Market and Why Liberals Should Too.
The free-market dogmas that have governed the United States over the last generation are increasingly under fire.
If private enterprise works so well, what happened to all the good
jobs? The New American Predator State refutes just about
everything many people thought was true about the virtues
of private markets.
James K. Galbraith on the American Corporate Republic (Part 1)
James K. Galbraith on the American Corporate Republic (Part 2)
James K. Galbraith on the American Corporate Republic (Part 3)
Reaganism was founded on three policies: deregulation, monetarism and low taxes. The first was was so that lobbyists could extract more money from those who can afford to pay - and sometimes from those who cannot.
It is fair to say that there will never again be any U.S. government for which a truly principled conservative might work. We are still living in an economic ecosystem dominated by industrial giants. You cannot impose a wage standard on China or Vietnam. But you can do it at home.
You want higher wages? Raise them. You want more and better jobs? Create them. Yes, the free market has produced robust growth and central planning has usually failed. If it fails, it's the market's fault. That seemed preposterous when I first read it; but in the wake of the collapse of Fannie Mae and Freddie Mac, when all of Wall Street could be headed for a bailout, and next in line is General Motors and many other major employers, one wonders.
Nothing remains of the Reagan Revolution!
The Reagan Revolution (1981-2008)
Economic freedom is reduced to the freedom to shop, including the freedom to buy elections, and anything that interferes is a threat. Market solutions are designed to enrich a favored oligarchy through a spoils system administered through the state’s structure.
There is a way out, but it is not easy. Historically, regulation and standards have required acceptance by progressive business - those firms that recognized they would lose in races to the bottom.
U.S. manufacturing sector has been in decline for 30 years, and that the current crisis requires that the U.S. government take immediate action on prosecuting unfair trade practices and currency manipulation.
Today, corporate and public policy alike are run by the most reactionary elements, well-paid rogues that suck capacity.
Wherever one finds a sector that still operates reasonably well, one finds remnants of New Deal institutions that support, guarantee, regulate, and leverage private activities, in spheres as diverse as higher education, housing, pensions, healthcare, the military-industrial complex (and the prison-industrial complex).
The ideology of free markets is bankrupt, but the US is not. The path is clear: re-regulation, planning, standards (including wage controls), and coming to grips with the nation’s global responsibilities.
Monetarism (the tactic used, successfully, by the Federal Reserve in the 1980's to nip inflation) is just a tool to kill off labor unions and elevate the power of Wall Street.
Low taxes failed to achieve their supposed purpose - encouraging saving.
If you look at the collapse of the *Bretton Woods system in 1971 and 1972, you had Richard Nixon and John Connelly as his Treasury Secretary putting on an emergency import surcharge because our trade deficit was 0.5 percent of GDP.
They considered that to be unacceptable. Now we're at 5 or 6 percent of GDP and people couldn't care less. They are not looking for increases in tariffs, but he does believe that when the credit crunch eases, capital needs to flow to companies that make products and provide high-end services, not into financial derivatives or phony investment vehicles.
The economy is a two wheel recession. The banking meltdown and failure of the Treasury bailout to free up credit are choking the housing market and construction industry, and falling retail sales, month after month, are leaving businesses with unsold goods and forcing layoffs in manufacturing and services alike.
The huge trade deficit with China with any effort to resurrect the economy is doomed to create massive foreign borrowing, another round of excessive consumer borrowing, and a second banking crisis that the Treasury and Federal Reserve will not be able to reverse.
Going forward, the economy will add some jobs for college graduates with technical specialties in finance, health care, education, and engineering. However, for high school graduates without specialized technical skills or training and for college graduates with only liberal arts diplomas, jobs offering good pay and benefits remain tough to find. For those workers, who compose about half the working population, the quality of jobs continues to spiral downward.
Historically, manufacturing and construction offered workers with only a high school education the best pay, benefits, and opportunities for skill attainment and advancement. Troubles in these industries push ordinary workers into retailing, hospitality, and other industries where pay often lags.
Construction employment fell by 48,000 in October. This is a terrible indicator for future GDP growth. Retailing shed 38,000 thousand jobs, and financial services lost 14,000 jobs. Manufacturing has lost 90,000 jobs, and over the last 103 months, manufacturing has shed more than four million jobs. The trade deficit with China and other Asia exporters is the major culprit.
Fix the banks, address unfair Chinese trade practices,
and formulate new energy policies or be Nero and watch Rome burn!