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August 6 - August 12, 2017
Put simply, globalization and technological change have made most of us less competitive. The tasks we used to do can now be done more cheaply by lower-paid workers abroad or by computer-driven machines. My solution—and I’m hardly alone in suggesting this—has been an activist government that raises taxes on the wealthy, invests the proceeds in excellent schools and other means people need to get ahead, and redistributes to the needy.
the increasing concentration of political power in a corporate and financial elite that has been able to influence the rules by which the economy runs.
The remedy is for the vast majority to regain influence over how the market is organized.
Time and again we have saved capitalism from its own excesses. I am confident we will do so again.
Government doesn’t “intrude” on the “free market.” It creates the market.
those who argue for “less government” are really arguing for a different government—often one that favors them or their patrons.1
In order to have a “free market,” decisions must be made about • PROPERTY: what can be owned • MONOPOLY: what degree of market power is permissible • CONTRACT: what can be bought and sold, and on what terms • BANKRUPTCY: what happens when purchasers can’t pay up • ENFORCEMENT: how to make sure no one cheats on any of these rules You
Big corporations can use bankruptcy to rid themselves of burdensome pension obligations to their employees, for example, while homeowners cannot use bankruptcy to reduce burdensome mortgages, and former students cannot use it to reduce burdensome debts for higher education.
the “free market” would generate outcomes that improved the well-being of the vast majority.
ways they entrench and enlarge that power by influencing the rules of the game. These include escalating campaign contributions, as well as burgeoning “independent” campaign expenditures, often in the form of negative advertising targeting candidates whom they oppose; growing lobbying prowess, both in Washington and in state capitals; platoons of lawyers and paid experts to defend against or mount lawsuits, so that courts interpret the laws in ways that favor them; additional lawyers and experts to push their agendas in agency rule-making proceedings; the prospect of (or outright offers of)
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in the first three decades following World War II, corporate managers saw their job as balancing the claims of investors, employees, consumers, and the public at large. The large corporation was in effect “owned” by everyone with a stake in how it performed. The notion that only shareholders count emerged from a period in the 1980s when corporate raiders demanded managers sell off “underperforming” assets, close factories, take on more debt, and fire employees in order to maximize shareholder returns.
What’s the proper balance between giving would-be inventors enough ownership that they’re motivated to invent and giving the public affordable access to their discoveries?
Drug prices are high in America partly because, while other governments set wholesale drug prices in their countries, the law bars the U.S. government from using its considerable bargaining power to negotiate lower costs. But the bigger reason drug prices are so high in America is that drugs are patented—and those temporary monopolies often last beyond when the patents are supposed to run out (now twenty years);
Many lifesaving drugs continue to be made by only one company long after the original patent expires. In part, that’s because the Patent Office often renews patents on the basis of small and insignificant changes to the original drugs that technically make them new and therefore patentable.
Many drugs that are available over the counter in other countries can be bought only by prescription in the United States, and the drug companies aggressively market these brands long after the patents have expired so that patients ask doctors to prescribe them. America is one of the few advanced nations that allow direct advertising of prescription drugs to consumers. It is illegal for Americans to shop at foreign pharmacies for cheaper versions of the same drugs sold in the United States, either branded or generic.
The law allows pharmaceutical companies to pay doctors for prescribing their drugs.
Drug companies pay the makers of generic drugs to delay their cheaper versions.
The Copyright Term Extension Act of 1998 was also known around Washington as the Mickey Mouse Protection Act because it was basically about Mickey. Walt Disney had created Mickey in 1928, so under the prevailing seventy-five-year corporate limit Mickey would move into the public domain in 2003. Pluto, Goofy, and the rest would become public shortly thereafter. That would mean big revenue losses for the Disney Corporation. Accordingly, Disney lobbied Congress intensively to extend copyright protection for another twenty years, as did Time Warner, which held copyrights on many twentieth-century
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In sum, property—the most basic building block of the market economy—turns on political decisions about what can be owned and under what circumstances. Due to the increasing wealth and political influence of large corporations, as well as the subtlety and complexity of the contours of intellectual property, these political decisions have tended to enlarge and entrench that wealth and power. The winners are adept at playing this game.
Many of the corporations that have gained dominance over large swaths of the economy in recent years have done so by extending their domains of intellectual property; expanding their ownership of natural monopolies, where economies of scale are critical; merging with or acquiring other companies in the same market; gaining control over networks and platforms that become industry standards; or using licensing agreements to enlarge their dominance and control. Such economic power has simultaneously increased their influence over government decisions about whether such practices should be
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Between 1980 and 2014, the financial sector grew six times as fast as the economy overall.
Edward G. Ryan, the chief justice of Wisconsin’s Supreme Court, warned the graduating class of the state university in 1873. “The question will arise, and arise in your day, though perhaps not fully in mine, ‘Which shall rule—wealth or man; which shall lead—money or intellect; who shall fill public stations—educated and patriotic free men, or the feudal serfs of corporate capital?’ ”
the pattern in recent decades has been for large corporations, Wall Street banks, and wealthy individuals to have ever-greater clout.
When an industry doesn’t want a law enacted but fears a public backlash if it openly opposes the proposed law, it quietly makes sure that there aren’t enough funds to enforce it.
state judges and attorneys general who are elected to their positions,
Their money buys lobbyists, campaign contributions, public relations campaigns, squadrons of experts and studies, armies of lawyers, and quiet promises of future jobs.
Economic dominance feeds political power, and political power further enlarges economic dominance.
Forgive the student debts of graduates who choose social work, child care, elder care, nursing, legal aid, and teaching.
According to this logic, the minimum wage should not be raised because workers at today’s minimum are worth no more than they are already paid.
CEOs of big companies, by this reasoning, are worth every penny of their compensation packages, which fifty years ago averaged twenty times that of the typical worker but now average almost three hundred times.
the current incentives for the working poor are not nearly large enough to get them to do what society expects of them, while providing them some measure of dignity. Meanwhile, the financial incentives for the non-working rich are far greater than can be justified by any measure of their contribution to society.
Corporate buybacks thereafter soared because they became a ready means for top executives to pump up stock prices and cash in their stock options.
Not only do stock buybacks enrich CEOs and other top executives at the expense of smaller investors who do not know about the timing or amounts of buybacks, they also drain away money the corporation might otherwise spend on research and development, long-term expansion, worker retraining, and higher wages.
Meanwhile, you and I, and other taxpayers, are subsidizing all this. That’s because corporations deduct CEO pay from their income taxes, requiring the rest of us to pay more proportionally in taxes to make up the difference.
shareholders are the ones who should decide on CEO pay. In
Taken together, their campaign contributions, bundled contributions, influence over their corporate political action committees, lobbyists, and implicit promises of future employment to certain government officials give them substantial say over the rules of the game.
The reason Wall Street bankers got $26.7 billion in bonuses in 2013 was not because they worked so much harder or were so much more clever or insightful than most other Americans. They received those bonuses because they happen to work in institutions that hold a privileged place in the American political economy. The subsidy going to the big banks comes from you and me and other taxpayers because we paid for the last bailout,
Wall Street accounts for such a large proportion of campaign donations to major candidates for Congress and the presidency of both parties and maintains a lucrative revolving door connecting it to Washington.
the $26.7 billion distributed to Wall Street bankers in 2013 bonuses would have been enough to more than double the pay of every one of America’s 1,007,000 full-time minimum-wage workers that year.
“industrial statesmen,” which in many respects they did—helping to pilot an economy generating broad-based prosperity.
a radically different vision of corporate ownership erupted in the late 1970s and early 1980s.
The easiest and most direct way for CEOs to accomplish this feat was to cut costs—especially payrolls, which constitute most firms’ largest single expense.
the average worker today is no better off than his equivalent was thirty years ago, adjusted for inflation. Most are less economically secure. Not incidentally, few own any shares of stock.
the interests of large corporations and Wall Street—to fully protect the value of their intellectual property and financial assets—time and again trump the interests of average working Americans to protect the value of their labor.
the demise of unions.
Until quite recently, poverty was largely confined to those who did not work—widows and children, the elderly, the disabled and seriously ill, and those who had lost their jobs. Public safety nets and private charities were created to help them. It was rare for a full-time worker to be in poverty because, for the reasons I have noted, the economy generated a plethora of middle-class jobs that paid reasonably well and were inherently secure.
evidence suggests that few if any jobs would be lost if the minimum wage were to be increased at least to its 1968 level, adjusted for inflation. Unlike industrial jobs, minimum-wage retail service jobs cannot be outsourced abroad. Nor are these workers likely to be replaced by automated machinery and computers, because the service they provide is personal and direct: Someone has to be on hand to help customers or dole out the food. In addition, and significantly, the gains from a higher minimum wage extend well beyond those who receive it directly. More money in the pockets of low-wage
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the new work requirements have merely reduced the number of poor people who are jobless, while increasing the number of poor people who have jobs.
The achievement gap between poor kids and wealthy kids isn’t mainly about race. In fact, the racial achievement gap has been narrowing. It’s a reflection of the nation’s widening gulf between poor and wealthy families, of how schools in poor and rich communities are financed, and of the nation’s increasing residential segregation by income.
support public schools comes from local property taxes. The federal government provides only about 10 percent of all funding, and the states provide 45 percent, on average. The rest is raised locally.
