Ken

Our current national budget debate reminds me of a quote from Charles Dickens in David Copperfield:

Annual income twenty pounds, annual expenditure nineteen six,
result happiness.
Annual income twenty pounds, annual expenditure twenty pound ought and six,
result misery.

Jeffrey Sachs posted a fascinating piece in The Huffington Post Sunday, in which he applied a "misery index" to the economies of the U.S., Canada, and Western Europe.

He was kind enough to also post his data, so I downloaded it, and created the following chart:

Sach's "Misery Index" is the sum of the unemployment rate, the budget deficit, and current account deficit (broadly meaning more imports than exports) of each country—represented by the black diamonds on the chart.

As you probably recall, this series began with the following observations and conclusions:

1. The standard "free-market" doctrine being thrown around today ignores three very basic points:
1. All modern markets are created and regulated by laws, and couldn't exist otherwise—so the idea of a “free market” without government intervention is nonsense.
2. Insofar as a market can be left free of government intervention, it quickly becomes dominated by a small group of the wealthy and powerful—thus ceasing to be free.
3. A truly free market, in the sense which makes market forces work the way they should, isn’t free of government intervention—it’s free of the control of the rich and powerful.
2. So it’s essential, if we are to have a truly free market, for the 99% to use government to keep the 1% from running the show in three ways. We must:
1. Limit the power of the 1% to control, evade, and undermine any attempts at regulation. This means
1. taxing them heavily enough to decrease their power, while using the money to...
2. Strengthen the power of the 99% to resist the 1%, and then
3. Change the laws to inhibit the abuse of wealth and power.

(You can see some concrete suggestion about taxing the 1% and strengthening the 99% here and here.)

That last point—inhibiting the abuse of wealth and power—is the topic of todays post.

Here are a few suggestions:

I pointed out, in the previous post, that the recent Republican attack on net neutrality—on your right, for example, to read the daily mull even if your broadband company doesn’t like what I say here—that the Republican attempt to destroy that right is rooted in the specific notion of freedom which big money conservatives and social conservatives share.

The liberal view of freedom is centered in the individual—on the right to live as he or she sees fit, as long as that doesn’t infringe on the rights of others.

The conservative view of freedom is centered on power—on the right of those in power to infringe on the individual’s right to live as he or she sees fit.

Conservatives tend to stand for the right of those with power—be it government or business or teachers in the classroom—to deprive citizens of freedom.

Conservatives in the Republican voting base stand...

Remember, this series is about creating a free market, and, in the process, strengthening freedom and democracy in the country.

A laisez-faire market is neither free, nor beneficial.

It will eventually be controlled by wealthy corporations to the detriment of freedom in general.

But a truly free market—one which is kept free of the dominance of wealth—is generally beneficial to all.

Last time we looked at the first of three ways to keep the market free, by stemming the power of wealth.

The three ways were:

1. Slow down the growth of wealth among the 1%.
2. Increase the wealth and power of the 99%.
3. Pass laws that limit the abuse of power by the wealthy.

This time we look at the second step: increasing the wealth and power of the 99%.

The steps outlined last time all had to do with taxes aimed at top incomes in one way or another.

Those taxes weren’t designed to raise money, but rather to slow the growth of wealth, and the unbalanced power it entails.

But they would raise money, and quite a bit of it.

Which is fortunate, because we can put that money to good use, in order to strengthen the 99%.

Here are six suggestions:

In the last few posts I’ve advanced the following argument:

1. The current market is not a natural phenomenon, but is a creation of government—a creature of laws and policies and contracts based on those laws and policies.
2. Because of this, we the people, through our government, inevitably exert control over that market, and have a responsibility to see that it functions in the best way for all of us.
3. To the extent that we neglect that responsibility the fact that wealth is power will inevitably create an imbalance in the market in favor of the wealthy which will lead to a political imbalance in the country, also in favor of the wealthy.
4. If this continues, we will not only lose the free market, but we will cease to be a free country.
5. There are three ways we can keep a wealthy minority from taking over the country:
1. We can keep the 1% from getting too much wealth and power.
2. We can increase the wealth and power of the 99%.
3. We can use various types of laws and regulations to control the misuse of power by the 1%.

This post looks at the first of these—six ways to limit the wealth and power of the 1%.

Most ways to do this involve taxation.

Some suggestions:

So far we’ve established the following:

1. Government--the influence of we, the people of the United States of America, cannot be separated from the market.
   
   The market is an invention of our government. We can only decide what role we, in the form of government, will play in the market, not whether we will play one.
2. Government isn’t the main danger to a truly free market.
   
   The overriding danger is the growing power of the 1%—the pooling of wealth at the top where it can coerce the 99%, control the market, and corrupt the institutions of our government, undermining democracy.
3. The wealth and power of the 1% is not theirs by right or fairness.
   
   It was not earned, but accumulated from the hard work and the creativity of the 99%.
4. So it makes absolute sense—both in terms of practicality and fairness—for all of us, through our role as government, to level the playing field.

There are many ways to do this, but recently the 1% have become very adroit at evading the more traditional approaches.

Here’s a quick list of options: all of which have been tried previously, and all of which have been dodged one way or another by the 1%:

In the last two posts (To read this series from the beginning, start here.), I’ve argued that the dogmatic worldview of the Free-marketers falls under its own weight on two points:

1. It is impossible to have a modern market at all without government being intimately involved.
2. Without outside constraints a free market will not remain free: it will come under the control of a tiny group of the very wealthy.

Ironically, those same points can lead us to a solution, by showing us how we can have a truly free market.

The problem, of course, centers on the meaning of the word “free”.

Up until now, I’ve accepted the definition of the Free-market cult, which defines “free” as meaning “free from government intervention”.

Last time we looked at the first fundamental flaw in the faith of Free-marketers:

1. The entire idea of a capitalistic market—the sort they advocate—is only made possible by a very artificial concept of ownership: a concept which is created and enforced by government intervention. 

• The kind of ownership which makes a modern market possible is created through laws and contracts and government enforcement (through force) of those laws and contracts.
• The currency which makes modern markets practical is a legal fiction, concocted and enforced by government intervention.

But let’s move on to the second fundamental flaw in their Faith.

Let’s enter into their fantasy world and pretend that it is possible to have a completely laissez-faire market: a market in which somehow contracts are enforced without any government involvement, in which the currency is put in place by divine decree.

The occupiers of Wall Street, and of other public areas around our nation, are highlighting a doctrinal schism within our national soul.

Not all doctrines are religious.

There are political, and economic doctrines, too—and many of those are accepted on faith, as well.

The doctrine in question is the absolute and unquestioning belief that the only solution to any and every economic problem is the free market—by which the true believers mean a laissez faire market: a market with no government intervention.

• If health costs are too high it’s because the market isn’t free enough.

• If income is unfairly distributed it’s because the free market hasn’t had a chance to work.

• If unemployment is too high, it’s because we haven’t allowed “market forces” to do their job.

Like most doctrines accepted on blind faith, this one begins to fall apart the moment it’s examined closely.

Many years ago, when I was first establishing my private educational practice, I signed up for a seminar on running a consulting firm, to see if anything they had to say applied to my new business.

The seminar leader turned out to be a consultant only in name: he used his title of "security consultant" to sell companies on his real business, which was providing outsourced security personnel.

He hired private security cops, then rented them out to the companies he "consulted" for.

So I learned very little about consulting from him.

But I did learn something far more important.

In the course of his lecture he told us how he got into "consulting" and about a "revelation" that had come to him one night in bed.

He started out as a security guard, but his employer didn't want to pay his payroll taxes and so insisted that he work as an outside contractor.