Welcome to a world where the bottom line trumps the common good and government takes a back seat to big business.
I have addressed this subject before. We all have our opinions on Capitalism and Democracy or Capitalism V Democracy.
Capitalism’s role is to increase the economic pie, nothing more.
While Democracy, at its best, enables citizens to debate collectively how the slices of the pie should be divided and to determine which rules apply to private goods and which to public goods.
If we are to restructure the relationship we could not start at a better place than by Putting Ownership Back into Democracy.
Our Governments are paying the penalty for the years they allowed corporations and elites buoyed by runaway economic success to undermine the government’s capacity to respond to citizens’ concerns which has lead to: A sense of political powerlessness which is on the rise among citizens in Europe and the USA.
Today, the tasks of re balancing is increasingly being left to the market.
Companies have shed their loyalties to communities with CEOs who take home exorbitant paychecks from industries that often wreak havoc on the environment. They have morph into global supply chains of great power plundering the world for Profit.
Much of labor inequality comes because high earners getting paid through stock options and capital ownership.
Relative poverty, what we are now calling inequality cannot be viewed in isolation from the larger economy. We must take disparities in the way the benefits of growth and productivity are distributed into account. We haven’t really begun to tackle this problem.
The result is an arms race for political influence that is drowning out the voices of average citizens.
If the Labor Party in the UK were to adopted Putting Ownership Back into Democracy such a policy which would return it to its core values would win them the forthcoming election.
While corporations are increasingly writing their own rules, they are also being entrusted with a kind of social responsibility or morality which of course does not exist as Corporate executives are not authorized by anyone — least of all by their investors — to balance profits against the public good.
Shareholders do not invest in firms expecting the money to be used for charitable purposes. They invest to earn high returns.
Now it the time to create Tax breaks for any privately owned company that offer participating of employees in a share of their profits or losses through stock options. Such a course of action should be encouraged – so that workers can supplement their wages with significant capital ownership stakes and meaningful capital income and profit shares.”
In other words, let’s turn everyone into a capitalist.
The purpose of democracy is to accomplish ends we cannot achieve as individuals.
But democracy cannot fulfill this role when companies use politics to advance or maintain their competitive standing, or when they appear to take on social responsibilities that they have no real capacity or authority to fulfill.
That leaves societies unable to address the trade offs between economic growth and social problems such as job insecurity, widening inequality, and climate change. As a result, consumer and investor interests almost invariably trump common concerns
It is worth contemplating for a moment Civilization advances by extending the number of important operations which we can perform without thinking about them.
Indeed if any Political party were to recognizes that the worsening inequality is an inevitable outcome of free market capitalism it would be large a step in the right direction.
Entrepreneurs are become increasingly dominant over those who own only their own labor. For instance Zero Hour Contracts or for a better word Modern day slavery.
Politicians are surrendered more and more power to trade, to global markets and to what I call supranational bodies like the International Monetary Fund, the World Bank, the world trade organisation, the EU.
The question is, what is the point in electing any one when globalization is changing national politics and our states are activity selling your countries resources to privatization for short-term profit.
Fresh Water, Clean Air, Power, Rail Transport, Medical Care and Education should be state-owned. Run by the Nation for the Nation not for the GDP.
We are on a path toward a degree of inequality that will reach levels likely to cause severe social disruption. I don’t have to tell you where to look.
Politicians forget about the constant small changes which make up the whole economic picture and spend their time fighting between the past and future, between inherited entitlements and future investment. They put too much emphasis on elections and too little the other essential features of democracy.
It’s no wonder that politicians have to lie all the time.
There was a time that people elected representatives who pulled the levers of national power for a fixed period.
You don’t have to have a crystal ball when looking at the world to realize that economic growth worldwide is very likely to be stuck at 1 to 1.5 percent through the rest of this century.
And that the digital revolution it turning democracy’s institutions into out of date institutions that are handing more powers to special interests turning politics into the struggle of who gets what, when, how.
Technological changes and discontinuities (or globalization) have created a surge in inequality, where online hyper democracy rules and will continue to do so.
The Internet makes it easier to organise and agitate, in a world where people are voting daily in reality TV or supporting a petition with the click of a mouse. They only vote for Government every five years.
Political power changing is also a major contributor to the rise in inequality in advanced economies.
If we are honest with ourselves today, we will acknowledge that the ideal of Democracy has never failed, but that we haven’t carried it out, and in our lack of faith we have debased the human being who must have a chance to live if Democracy is to be successful.
The Moral Basis of Democracy (1940)
When the Clean Air Act was passed in the United States, the joke in Tokyo and Osaka was that while Ford and General Motors called in their lawyers, Toyota and Nissan called in their engineers.
Here is what going wrong.
If political power exactly followed economic power there is little hope for Democracy.
We all know that it is not possible to please all the people all of the time.
The problem is that democracy and capitalism are not bed partners.
Traditional liberal government policies on spending, taxation and regulation will fail to diminish inequality. The higher” the rate of return on capital is in comparison to the rate of growth of the economy. The higher this ratio is, the greater inequality is.
It all starting roughly with the onset of World War I.
The owners of capital – those at the top of the pyramid of wealth and income – absorbed a series of devastating blows. These included the loss of credibility and authority as markets crashed; physical destruction of capital throughout Europe in both World War I and World War II; the raising of tax rates, especially on high incomes, to finance the wars; high rates of inflation that eroded the assets of creditors; the nationalization of major industries in both England and France; and the appropriation of industries and property in post-colonial countries.
In Eisenhower’s words, “Should any political party attempt to abolish Social Security, unemployment insurance, and eliminate labor laws and farm programs, you would not hear from that party again in our political history.”
Leaving us with a belief that the economy is the be all and the end all to keep the masses happy.
However personal income distribution is getting more unequal — which indeed is what we have witnessed in the past 30 years. Zero Hour Contracts, no security, higher and higher Vat.
There is no point in creating millions of modern-day slavery jobs. They are worthless in galvanizing a nation’s wealth. Pride of ownership is what produces productivity and happiness. It’s not rocket science.
On a world scale to halt inequality there are a few options:
Create a World Aid Fund which feeds of Profit by placing a world aid Commission on all High Frequency Trading, on all Foreign Exchange Transactions ( over $20,000) on all Foreign Wealth Funds Acquisitions. (see previous Posts)
Impose a global progressive tax on wealth – global in order to prevent (among other things) the transfer of assets to countries without such levies. A global tax, in this scheme, would restrict the concentration of wealth and limit the income flowing to capital.
Impose an annual graduated tax on stocks and bonds, property and other assets that are customarily not taxed until they are sold.
The very infeasibility of establishing a global wealth tax serves to reinforce the argument concerning the inevitability of increasing inequality.
The International Labor Organization, an agency of the United Nations, reported recently that the number of unemployed grew by 5 million from 2012 to 2013, reaching nearly 202 million by the end of last year. It is projected to grow to 215 million by 2018.
No country can deal with Climate Change, and the forthcoming shortage of fresh water, never mind tax evasion.
The political economy is such that the political power to enact those taxes also requires a mobilized citizenry and institutional power, such as a robust labor movement. When in fact all that people want is equal opportunity.
I am no Karl Marx but the capitalist economic system is in its present state undermining the democratic system by compromising the very values that democracy was founded upon.
It is imperative to remember that we are also citizens who have it in our power to reduce social costs, making the true price of the goods and services we purchase as low as possible for all.