Monday, May 11, 2009

POWERFUL READ: The Squandering of America: How the Failure of Our Politics Undermines Our Prosperity

I read a lot especially about financial policies and here's another good book that clearly states that the top 1% ruling elite class have basically fucked us all.

As Keynesianism has been surpassed by a resurgent free market ideology, many of the policies, institutions and regulations of the New Deal have been abandoned in favor of a more business-friendly orientation. Kuttner argues that these changes have further enriched the already wealthy at the expense of America's lower and middle classes, exacerbating inequality and systematically weakening the economy. The controversial American Prospect editor favors a form of soft capitalism, in which the vicissitudes of the market and the risk to which it exposes ordinary Americans are tempered by government intervention—or, as he colorfully puts it, public regulation of the market's self-cannibalizing tendencies. Bringing a wealth of historical knowledge to bear on the problems of financial regulation, Kuttner compares the causes of the Great Depression and other economic crises to behavior patterns evident in our market system today, with unfavorable conclusions.

As for Republicans' belief that the most successful in today's economy have earned their wealth, Kuttner notes that it more often is the result of abuse of power - crony boards of directors, tax-encouraged financial engineering (eg. hedge-fund managers), and others reaping the benefits of lobbyists - not "the market." (Examples of the latter: 1)Carlos Slim, the world's richest man, obtained most of his wealth through monopoly rights obtained to Mexico's telephone market through his friendship with the then President. 2)Similarly, Russia's plutocrats obtained great wealth through advantageous purchases obtained through helping then-President Boris Yeltsin. 3)CEO options (14% illegally back-dated, per one study) compensation is now about 9 times that from salaries + benefits + bonuses. 4)Other non-market facilitators of unearned wealth include lax enforcement of SEC regulations (encouraged by Congress), "independent" auditors colluding with management to rig books and ignore problems, government-arranged bailouts for investors in Mexico, Russia, Long-Term-Capital-Management, and sub-prime mortgages, and analysts serving as stock touts to bring underwriting business to their firms.)

Kuttner is not alarmed by "unfunded liabilities" associated with Medicare and Social Security. He points out that we will undoubtedly continue to spend billions/year in the future on the military, but nobody sees that as an unfunded liability. He proposes saving Medicare by expanding it to cover everyone - universal health care has lower overheads and pure Medicare costs (excluding the privatized portion) have risen slower than than the privatized portion.

On the important topic of "free trade," Kuttner is an exception to most economists, pointing out that the U.S. originally built its strong manufacturing sector behind high tariff walls, as did China, Japan, and Korea, and concluding that our manufacturing sector is now near collapse. He sees the coming devaluation as reducing out standard of living.

Finally, Kuttner sees both Republican and Democrat leaders tied to big business and continuation of the same problematic policies that enrich those at the top while undermining the remaining 80%. At the same time, too many voters fail to become informed and vote (pressures of two-income family) and are distracted by issues such as patriotism and homophobia.

The middle class today has many of the same economic vulnerabilities as the working poor: the risks of losing jobs, pensions, incomes and health insurance; rising costs of college tuition and home ownership relative to income. With the middle class increasingly subject to economic vulnerabilities that used to be limited to the working poor, a class politics championing the bottom 80 or 90 percent is just what is needed." Now the elites in this country would have us all believe that these declining living standards are all our fault. I think most of us instinctively know better. The fact of the matter is that the deck has been stacked against most working Americans by unfair trade agreements as well as egregious financial speculation. The decline of living standards for most working Americans has been a slow but painful process that shows no signs of abating any time soon. If we are to reverse this situation it is up to the American people to educate themselves about these issues and demand change.

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