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Right’s Economic (Scroogist) Victory: It Has All Gone Too Far

Updated: Sep 21

Setting the stage for the story in this Blog, from Andersen (2020):


Even Richard Posner, the pioneering conservative scholar and senior federal judge who we last saw celebrating the right’s economic victory with some of his fellow masterminds just before the turn of the century, admitted in 2017 that it has all gone too far…. [the] real corruption, the ownership of Congress by the rich.” And the Supreme Court’s Citizens United decision in 2010, the conservative majority’s view that “there’s no such thing as spending too much money to support a political candidate, because your money is actually speech—that’s all nonsense…(p. 299)”


… (since 1970s-1980s)… we let a powerful clique and its enablers turn a quintessentially modern and reasonably fair political economy that led the world, into a freakishly old-fashioned and unfair one (p. 311)


Shameless Scroogism (and, it is going to be really hard, like it is for the camel, to get through the eye of that needle, a reminder to the "Christian" Scroogists, the Christian Right included) is the new economic norm in the US. And, it is driving the failure of both US capitalism and US democracy. As Andersen (2020, p. 208, quoted in Giriharadas, 2020) says it:


…(the American economy is) all shaped by the new governing economic gospel: everybody for themselves, everything’s for sale, greed is good, the rich get richer, buyer beware, unfairness can’t be helped, nothing but thoughts and prayers for the losers … (and) America the first large modern society to go from fully developed to failing.


The US economy is clearly failing, and taking down US democracy with it. A Potemkin Economy created by an Administration purchased by the rich, and benefiting only the rich, is not working. And, it can never work, built as it is on Zombie Ideas that work to concentrate the income and wealth, and the power it buys. The Right (and we might suppose some enablers on the Left, too) is on a path to rampant cronyism: As Munger and Villarreal-Diaz (2019) make clear, it is the primal tendency when greed is not tempered and bounded.

Another indicator of going too far: Protests over obvious injustice reframed as sedition by the Department of Injustice. Obviously incompetent, cruelty based mismanagement of the Pandemic. Billions of dollars in profits going to a few of the very rich, produced by in effect forcing people to go to work without protective gear. Thousands died when in fact thousands could have been saved, which is not all bad: We now have an increase in the supply of Ghosts --- probably 200000 by the time they will really be needed --- for haunting the Scroogists this Christmas. And, they will have plenty to do: Full employment for the Ghosts of Christmas, and perhaps at least a few Scroogists will come to realize they have gone too far? Enough, I say.


And, we economists are not supposed to say anything about access to income and wealth, and how it is shared or not, Right? As Lucas (2004, quoted in my forthcoming book, Lynne, Chapter 14, in press):


…who was the President of the American Economic Association, a NeoClassEcon, and a Nobel Prize in Economics awardee, said it: “Of the tendencies that are harmful to sound economics, the most seductive, and in my opinion the most poisonous, is to focus on questions of distribution (quoted in Stiglitz, 2019, p. 33).” So, considering distribution questions is harmful to economics?


It is true. The Neoclassical Economics (as practiced by the NeoClassEcon, the Microeconomics) framework and theory --- claimed to be "science" --- do see it as in effect harmful, and remain silent on the matter of who is to be rewarded and credited for making wealth. It also pays no attention to the taking and keeping of wealth. As McCloskey (2019, p. 93) says it, said mainstream economists --- referring especially with respect to the dominant, most vocal over the years NeoClassEcon, represented in the Chicago School of Economics, especially the Libertarian Branch (the NeoClassEconL) made famous with Milton Friedman --- “…(are) opposed to any ethical reflection whatever.”


As Metaeconomics makes clear, said lack of ethical reflection ensures that a humane liberalism based economic system --- the kind Adam Smith had in mind --- is impossible to achieve. The ethics of making, taking, and keeping wealth needs to be on the table, all the time. If it is not, the primal tendency to ego-based self-interest only --- reflecting the arrogance of self-love --- will take over. And, that which everyone can go along with, as Adam Smith warned, will be lost. The Right wing has gone way too far: We have lost that which reasonable people can go along with, as represented in the concentration of income and wealth --- and an extremely limited ability to do anything about it, with politicians now owned by the barons --- going back to what it was in the robber baron era of the late-1800s, up through the 1920s during which time going too far led to the 1930s Great Depression.


As Andersen (2020) makes clear, the US economy was reasonably well balanced during the 1930s-1960s, after the New Deal was put into place. Labor unions flourished, giving offset to economic power, better ensuring that credit was given to everyone who helped make the wealth. Cooperatives also flourished, giving workers access to capital, as well as the income from the business for which they worked. Financial and banking institutions were bounded, keeping casino capitalism at bay. Corporate governance paid attention to everyone, not just the shareholders and the stock options for CEOs. The price of public goods --- unfortunately we disparagingly refer to said prices as taxes --- was to be paid by everyone, with it deemed fair that higher income people and companies would reasonably be expected to pay a bit more for said public goods, and they were deemed good. Now public goods are somehow deemed bad goods? And every private good, even if it is a bad good (like private goods produced while destroying Spaceship Earth systems), considered good? Good is bad and bad is good? Sounds like we are living in Fantasyland (another book by Andersen). What happened?


All of it was changed, as the Right held sway, tipping the balance scale to the point it is now almost going through the floor, it is hitting bottom: The scale of Economic Justice has tipped so far to the Right that no one other than the few Scroogists at the top see it as anything they can go along with. The imbalance is absurd.


The amazingly well-orchestrated move by the Right --- often stealth (as MacLean, 2017, makes clear), play the fiddle loudly so no one notices that Rome is being burned down --- starts in the early-1970s with the Friedman Doctrine, enabled by the “science” practiced by the NeoClassEcon and the NeoClassEconL. It gains momentum in the early-1980s with the Reagan Revolution. Both the Doctrine and the Revolution were built on a mythical foundation that a less than tempered and bounded pursuit of self-interest only could only do good things for everyone. And, if it did not, it did not matter: Total opposition to any ethical reflection. Also, the other huge myth was that capitalism could be made more viable by dis-investing in government, when in fact capitalism depends on a joint market&government, as Metaeconomics makes clear.

And, what was done, exactly? Well, Andersen (2020) goes through the details in 431-pages, and I am sure he kept the book short! I will go through some it here in a minute. One general observation is this: The Right has been extremely busy, and been very successful, I guess we might even say “genius.” Unfortunately, the genius of it all has gone to the dark side. That is, credit is due, in that it has been driven by a touch of genius, but evil genius now rules the day, as it is clearly going too far.


In fact, some of it has been outright ruthless, built in deception and distortion, like convincing the American public that overfilling the atmosphere with greenhouse gases --- especially carbon dioxide --- was not an issue (see Andersen, 2020, esp. pp. 226-228). The distortion has been turned into a kind of orthodoxy of the Right, with little to no basis in facts. Distortion of the scientific consensus on what is driving climate change --- exceeding the capacity of the Spaceship atmosphere and ecosystem to handle way too much greenhouse gas --- has had dramatic effects, costing Americans billions of dollars, as well as loss of priceless Spaceship resources. Ethics, please? How about science&ethics please: Again, the Right has gone too far, way too far, over to anti-science and unethical behavior, now even distorting Coronavirus science.


So, a few things, from Andersen (2020, pp. 118-121 ), “The Decade When Everything Changed and Our Present Was Created: 57 Data Points”, referring to the early-1980s, a few key events ( but please go read the book, to get the whole story):

Cable TV takes off, with the number of channels and of homes with cable tripling. Twenty-four-hour TV news begins.


The federal rule that TV and radio broadcasters must present a diversity of views is repealed (makes sense: Fox News as propaganda arm, much better at distortion than MSNBC).


Corporate taxes as a fraction of GDP drop by more than half in just four years from the late 1970s to the early ’80s. Federal enforcement of antitrust laws to rein in corporate power suddenly shrinks to a fraction of what it has been. The deregulation of business by government accelerates.


The long-standing federal prohibition on companies buying their own stock, meant to prevent share price manipulation, is repealed: Stock prices boom.

The new “shareholder value” movement’s redefinition of capitalism makes a company’s current stock price essentially the only relevant measure of corporate performance. The share of all stocks owned by a few big institutional investors triples (on its way to doubling again in the 1990s).


Increasingly abstract and untried and unregulated financial bets on other financial bets, derivatives, become normalized and start becoming economically significant. Leveraged buyouts, financial firms using frequently excessive debt to take over and often ruin companies, become normalized and significant.


Wall Street salaries increase by more than 25 percent (before increasing another 50 percent in the 1990s). The financial industry’s (and real estate industry’s) share of the total U.S. national income rises from 14 percent to over 35 percent in less than a decade.

The top income tax rate on the richest is reduced from 70 percent to 28 percent. The maximum tax rate on stock profits (capital gains) is reduced from 28 percent to 20 percent.


Estate taxes on the rich drop more than ever—for instance, the heirs to a $3 million fortune would pay $1 million less in taxes on it (and, by the 1990s, estate taxes essentially eliminated, with exemptions of $11M or so; hardly anyone pays estate taxes anymore: Typically only 2000 estates pay any taxes at all, as compared to like 140,000 estates in a typical year in the 1970s, ensuring dynasties of wealth into perpetuity; no restart, here).


The income of the most affluent top fifth increases by 25 percent and that of the richest top 1 percent almost doubles.


United States experiences the fastest and biggest increase in income inequality between the 1920s and 2020. After a century of wages increasing in sync with increases in productivity, that synchronization ends. Employees’ share of the national income abruptly declines from 62 percent to 56 percent and even more sharply for everyone but the richest tenth.


Median household income stagnates and median wages decline. The share of all wealth owned by the bottom 90 percent peaks and begins to decline. The withering of labor unions in companies accelerates dramatically, as public and political sentiment and regulations and laws turn against them.


Jobs in manufacturing rapidly disappear—by 22 percent during the decade. Companies start eliminating fixed pensions for retiring employees.


The fraction of companies providing employee health insurance peaks and starts to decline.

Companies begin replacing low-skill, low-wage workers with even-lower-wage workers supplied by outside contractors. The federal minimum wage is frozen for the entire decade, longer than ever, which translates to an effective pay cut of one-third for America’s lowest-paid workers.


The cost of four-year college and the student debt to pay for it suddenly start increasing significantly (because taxes reduced so drastically, the public good of education can no longer be funded).


Upward economic mobility—earning more than one’s parents did—begins to become much more unlikely.


U.S. healthcare spending and life expectancy both suddenly diverge from the rest of the rich world—heading from about average toward the top in spending and from about average toward the bottom in life expectancy.


After the scientific consensus definitively concludes a climate crisis is imminent, the petroleum industry and the political right begin aggressively downplaying and denying it, blocking government regulation.


The list are ones that especially caught my eye, and this is just in the 1980s: See Andersen for the rest. And, it is even more dramatic in the 1990s: People could probably go along with the 1980s, but not the 1990s: They are a bit much. Excessive greed has gone outside of all reasonable bounds, and the Right keeps pushing for more, like the POTUS and others on the Right working to eliminate the payroll tax on the way to eliminating one of the last New Deal programs, Social Security. The New Deal is being replaced, as Andersen (2020) makes clear, by the Raw Deal. Sobering lists, indeed. It is time for the cowardly Left, or better said, enabling idiots on the Left: As Andersen documents, the Left has been too willing to go along with the Right, essentially eliminating hard fought for New Deal principles and programs. It is time to step forward with courage, stop being idiots, bringing the Left's own version of genius to the table, and, if it has to be evil in order to fight evil --- well, hopefully not, if the Right gets some common sense about it all. And, keep in mind, everyone needs to go along with the market (including how it credits the wealth to all who contributed to it being made), or it cannot not do good things.


As a yard sign (mine!) pointing to the need to defeat a major enabler who is pushing it even further, way too far to the Right proclaims:







Indeed, saving capitalism will likely depend on it. And, if not Biden-Harris, the Business community itself will have to step-in and temper, bound their own behavior. The problem has even drifted over into the streets, reminiscent of what happened in Germany in the 1930s: Anti-fascists on the Left stirred to violence by Fascists on the Right, as capitalism and democracy collapses. An authoritarian oligarchy emerged in Germany, and it took a war to unseat it.


And, this Yard Sign is apolitical: That is, if the balance scale tips too far to the Left, next time around my yard sign will say: Make the Socialist Cry Again, which many of the Trump signs now say! Unfortunately, the cry of Socialist right now is like a whimper under the roar of the Scroogist.


Business/Market community (and Government enablers): Take notice. You are destroying the very thing you thought you were protecting by going too far. It is time to re-balance Right&Left, Market&Government. And, this is about ethics (and science, too, the Behavioral Economic science that points to the need for balance). So, don't get all bent out of shape about "taxing the wealthy" albeit that would help: Rather, do like Adam Smith suggested, go to the Station of the Impartial Spectator and ask "how would I wish to be treated" and, then, go do something about it. It is essential to a viable capitalism, as Adam Smith tried to teach, and, the extreme movement to the Right suggests the lesson has not been learned.


And, then, it has also become clear there will be a move to shift the balance in the supreme Ccurt more to the Right, too (Baker and Haberman, 2020). As Metaeconomics makes clear, such imbalance in the economy and the government, and now even the supreme court, does not bode well for building a viable capitalism&democracy. The kind of humane liberalism envisioned by Adam Smith cannot evolve in a viable way with such imbalance. It needs to be rebalanced toward something that everyone can go along with.

References

Andersen, Kurt. Evil Geniuses: The Unmaking of America, a Recent History. New York: Random House, Kindle Ed., 2020.

Baker, P. and Haberman, M. Trump and Democrats Brace for Showdown Over Supreme Court Seat.New York Times, September 20, 2020 https://www.nytimes.com/2020/09/20/us/politics/trump-supreme-court-rbg.html?action=click&module=Spotlight&pgtype=Homepage

Giridharadas, Anand. “Kurt Andersen Asks: What Is the Future of America?” New York Times, Book Review, August 11, 2020.

Lucas, Robert E. The Industrial Revolution. May 2004. Federal Reserve Bank, Minneapolis, MN.

Lynne, G. D. Metaeconomics: Tempering Excessive Greed. New York: Palgrave Macmillan, in press.

MacLean, Nancy. Democracy in Chains: The Deep History of the Radical Right's Stealth Plan for America. Penguin Books, 2017.

McCloskey, D. N. Why Liberalism Works: How True Liberal Values Produce a Freer, More Equal, Prosperous World for All. Kindle ed. New York: Yale University Press, 2019.

Stiglitz, Joseph E. People, Power and Profits: Progressive Capitalism for an Age of Discontent. New York: W. W. Norton and Company, 2019.

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