Why We Must End Upward Pre-Distribution to the Rich
You often hear inequality has widened because globalization and technological change have made most people less competitive, while making the best educated more competitive.
There's some truth to this. The tasks most people used to do can now be done more cheaply by lower-paid workers abroad or by computer-driven machines.
But this common explanation overlooks a critically important phenomenon: 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.
You often hear inequality has widened because globalization and technological change have made most people less competitive, while making the best educated more competitive.
There's some truth to this. The tasks most people used to do can now be done more cheaply by lower-paid workers abroad or by computer-driven machines.
But this common explanation overlooks a critically important phenomenon: 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.
As I argue in my new book, "Saving Capitalism: For the Many, Not the Few" (out this week), this transformation has amounted to a pre-distribution upward.
Intellectual property rights--patents, trademarks, and copyrights--have been enlarged and extended, for example, creating windfalls for pharmaceutical companies.
Americans now pay the highest pharmaceutical costs of any advanced nation.
At the same time, antitrust laws have been relaxed for corporations with significant market power, such as big food companies, cable companies facing little or no broadband competition, big airlines, and the largest Wall Street banks.
As a result, Americans pay more for broadband Internet, food, airline tickets, and banking services than the citizens of any other advanced nation.
Bankruptcy laws have been loosened for large corporations--airlines, automobile manufacturers, even casino magnates like Donald Trump--allowing them to leave workers and communities stranded.
But bankruptcy has not been extended to homeowners burdened by mortgage debt or to graduates laden with student debt. Their debts won't be forgiven.
The largest banks and auto manufacturers were bailed out in 2008, shifting the risks of economic failure onto the backs of average working people and taxpayers.
Contract laws have been altered to require mandatory arbitration before private judges selected by big corporations. Securities laws have been relaxed to allow insider trading of confidential information.
CEOs now use stock buybacks to boost share prices when they cash in their own stock options.
Tax laws have special loopholes for the partners of hedge funds and private-equity funds, special favors for the oil and gas industry, lower marginal income-tax rates on the highest incomes, and reduced estate taxes on great wealth.
Meanwhile, so-called "free trade" agreements, such as the pending Trans Pacific Partnership, give stronger protection to intellectual property and financial assets but less protection to the labor of average working Americans.
Today, nearly one out of every three working Americans is in a part-time job. Many are consultants, freelancers, and independent contractors. Two-thirds are living paycheck to paycheck.
And employment benefits have shriveled. The portion of workers with any pension connected to their job has fallen from just over half in 1979 to under 35 percent today.
Labor unions have been eviscerated. Fifty years ago, when General Motors was the largest employer in America, the typical GM worker, backed by a strong union, earned $35 an hour in today's dollars.
Now America's largest employer is Walmart, and the typical entry-level Walmart worker, without a union, earns about $9 an hour.
More states have adopted so-called "right-to-work" laws, designed to bust unions. The National Labor Relations Board, understaffed and overburdened, has barely enforced collective bargaining.
All of these changes have resulted in higher corporate profits, higher returns for shareholders, and higher pay for top corporate executives and Wall Street bankers - and lower pay and higher prices for most other Americans.
They amount to a giant pre-distribution upward to the rich. But we're not aware of them because they're hidden inside the market.
The underlying problem, then, is not just globalization and technological changes that have made most American workers less competitive. Nor is it that they lack enough education to be sufficiently productive.
The more basic problem is that the market itself has become tilted ever more in the direction of moneyed interests that have exerted disproportionate influence over it, while average workers have steadily lost bargaining power--both economic and political--to receive as large a portion of the economy's gains as they commanded in the first three decades after World War II.
Reversing the scourge of widening inequality requires reversing the upward pre-distributions within the rules of the market, and giving average people the bargaining power they need to get a larger share of the gains from growth.
The answer to this problem is not found in economics. It is found in politics. Ultimately, the trend toward widening inequality in America, as elsewhere, can be reversed only if the vast majority join together to demand fundamental change.
The most important political competition over the next decades will not be between the right and left, or between Republicans and Democrats. It will be between a majority of Americans who have been losing ground, and an economic elite that refuses to recognize or respond to its growing distress.
We are at a crossroads
This country and this world are at a monumental crossroads. In a few short weeks, US voters will have an opportunity to beat back the forces of fascism and confront the billionaires who are rigging the economy, our media system, and our democracy, making it increasingly impossible for ordinary people to get by. We’re not just talking about the election. We’re talking about what must be done once these fascist elements are vanquished from power. We need a bolder set of solutions than what either major party has so far been willing to offer and a working-class movement ready to fight like hell for it. Trump didn't emerge from nowhere. The conditions that fueled MAGA authoritarianism were created by decades of radical neoliberal economic policies and a corrupt political system dominated by corporate interests. They slashed taxes on the super-rich, promising that the benefits would trickle down. They said giveaways to the corporate titans would make life more affordable for the rest of us. It was all bullshit. And when a bitter, betrayed populace searches for someone to blame, right-wing demagogues have little trouble finding scapegoats. People know when they're being lied to, but you won't hear any of this from the corporate media. Only independent journalism—powered and funded by people who believe in building a better world—can deliver truly trustworthy daily news. Our Fall Campaign is underway, and we need your help. To power our newsroom through the rest of the year, we need to raise $125,000 by midnight on October 31. So if you share our vision, please contribute whatever you can to sustain our work. |
You often hear inequality has widened because globalization and technological change have made most people less competitive, while making the best educated more competitive.
There's some truth to this. The tasks most people used to do can now be done more cheaply by lower-paid workers abroad or by computer-driven machines.
But this common explanation overlooks a critically important phenomenon: 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.
As I argue in my new book, "Saving Capitalism: For the Many, Not the Few" (out this week), this transformation has amounted to a pre-distribution upward.
Intellectual property rights--patents, trademarks, and copyrights--have been enlarged and extended, for example, creating windfalls for pharmaceutical companies.
Americans now pay the highest pharmaceutical costs of any advanced nation.
At the same time, antitrust laws have been relaxed for corporations with significant market power, such as big food companies, cable companies facing little or no broadband competition, big airlines, and the largest Wall Street banks.
As a result, Americans pay more for broadband Internet, food, airline tickets, and banking services than the citizens of any other advanced nation.
Bankruptcy laws have been loosened for large corporations--airlines, automobile manufacturers, even casino magnates like Donald Trump--allowing them to leave workers and communities stranded.
But bankruptcy has not been extended to homeowners burdened by mortgage debt or to graduates laden with student debt. Their debts won't be forgiven.
The largest banks and auto manufacturers were bailed out in 2008, shifting the risks of economic failure onto the backs of average working people and taxpayers.
Contract laws have been altered to require mandatory arbitration before private judges selected by big corporations. Securities laws have been relaxed to allow insider trading of confidential information.
CEOs now use stock buybacks to boost share prices when they cash in their own stock options.
Tax laws have special loopholes for the partners of hedge funds and private-equity funds, special favors for the oil and gas industry, lower marginal income-tax rates on the highest incomes, and reduced estate taxes on great wealth.
Meanwhile, so-called "free trade" agreements, such as the pending Trans Pacific Partnership, give stronger protection to intellectual property and financial assets but less protection to the labor of average working Americans.
Today, nearly one out of every three working Americans is in a part-time job. Many are consultants, freelancers, and independent contractors. Two-thirds are living paycheck to paycheck.
And employment benefits have shriveled. The portion of workers with any pension connected to their job has fallen from just over half in 1979 to under 35 percent today.
Labor unions have been eviscerated. Fifty years ago, when General Motors was the largest employer in America, the typical GM worker, backed by a strong union, earned $35 an hour in today's dollars.
Now America's largest employer is Walmart, and the typical entry-level Walmart worker, without a union, earns about $9 an hour.
More states have adopted so-called "right-to-work" laws, designed to bust unions. The National Labor Relations Board, understaffed and overburdened, has barely enforced collective bargaining.
All of these changes have resulted in higher corporate profits, higher returns for shareholders, and higher pay for top corporate executives and Wall Street bankers - and lower pay and higher prices for most other Americans.
They amount to a giant pre-distribution upward to the rich. But we're not aware of them because they're hidden inside the market.
The underlying problem, then, is not just globalization and technological changes that have made most American workers less competitive. Nor is it that they lack enough education to be sufficiently productive.
The more basic problem is that the market itself has become tilted ever more in the direction of moneyed interests that have exerted disproportionate influence over it, while average workers have steadily lost bargaining power--both economic and political--to receive as large a portion of the economy's gains as they commanded in the first three decades after World War II.
Reversing the scourge of widening inequality requires reversing the upward pre-distributions within the rules of the market, and giving average people the bargaining power they need to get a larger share of the gains from growth.
The answer to this problem is not found in economics. It is found in politics. Ultimately, the trend toward widening inequality in America, as elsewhere, can be reversed only if the vast majority join together to demand fundamental change.
The most important political competition over the next decades will not be between the right and left, or between Republicans and Democrats. It will be between a majority of Americans who have been losing ground, and an economic elite that refuses to recognize or respond to its growing distress.
You often hear inequality has widened because globalization and technological change have made most people less competitive, while making the best educated more competitive.
There's some truth to this. The tasks most people used to do can now be done more cheaply by lower-paid workers abroad or by computer-driven machines.
But this common explanation overlooks a critically important phenomenon: 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.
As I argue in my new book, "Saving Capitalism: For the Many, Not the Few" (out this week), this transformation has amounted to a pre-distribution upward.
Intellectual property rights--patents, trademarks, and copyrights--have been enlarged and extended, for example, creating windfalls for pharmaceutical companies.
Americans now pay the highest pharmaceutical costs of any advanced nation.
At the same time, antitrust laws have been relaxed for corporations with significant market power, such as big food companies, cable companies facing little or no broadband competition, big airlines, and the largest Wall Street banks.
As a result, Americans pay more for broadband Internet, food, airline tickets, and banking services than the citizens of any other advanced nation.
Bankruptcy laws have been loosened for large corporations--airlines, automobile manufacturers, even casino magnates like Donald Trump--allowing them to leave workers and communities stranded.
But bankruptcy has not been extended to homeowners burdened by mortgage debt or to graduates laden with student debt. Their debts won't be forgiven.
The largest banks and auto manufacturers were bailed out in 2008, shifting the risks of economic failure onto the backs of average working people and taxpayers.
Contract laws have been altered to require mandatory arbitration before private judges selected by big corporations. Securities laws have been relaxed to allow insider trading of confidential information.
CEOs now use stock buybacks to boost share prices when they cash in their own stock options.
Tax laws have special loopholes for the partners of hedge funds and private-equity funds, special favors for the oil and gas industry, lower marginal income-tax rates on the highest incomes, and reduced estate taxes on great wealth.
Meanwhile, so-called "free trade" agreements, such as the pending Trans Pacific Partnership, give stronger protection to intellectual property and financial assets but less protection to the labor of average working Americans.
Today, nearly one out of every three working Americans is in a part-time job. Many are consultants, freelancers, and independent contractors. Two-thirds are living paycheck to paycheck.
And employment benefits have shriveled. The portion of workers with any pension connected to their job has fallen from just over half in 1979 to under 35 percent today.
Labor unions have been eviscerated. Fifty years ago, when General Motors was the largest employer in America, the typical GM worker, backed by a strong union, earned $35 an hour in today's dollars.
Now America's largest employer is Walmart, and the typical entry-level Walmart worker, without a union, earns about $9 an hour.
More states have adopted so-called "right-to-work" laws, designed to bust unions. The National Labor Relations Board, understaffed and overburdened, has barely enforced collective bargaining.
All of these changes have resulted in higher corporate profits, higher returns for shareholders, and higher pay for top corporate executives and Wall Street bankers - and lower pay and higher prices for most other Americans.
They amount to a giant pre-distribution upward to the rich. But we're not aware of them because they're hidden inside the market.
The underlying problem, then, is not just globalization and technological changes that have made most American workers less competitive. Nor is it that they lack enough education to be sufficiently productive.
The more basic problem is that the market itself has become tilted ever more in the direction of moneyed interests that have exerted disproportionate influence over it, while average workers have steadily lost bargaining power--both economic and political--to receive as large a portion of the economy's gains as they commanded in the first three decades after World War II.
Reversing the scourge of widening inequality requires reversing the upward pre-distributions within the rules of the market, and giving average people the bargaining power they need to get a larger share of the gains from growth.
The answer to this problem is not found in economics. It is found in politics. Ultimately, the trend toward widening inequality in America, as elsewhere, can be reversed only if the vast majority join together to demand fundamental change.
The most important political competition over the next decades will not be between the right and left, or between Republicans and Democrats. It will be between a majority of Americans who have been losing ground, and an economic elite that refuses to recognize or respond to its growing distress.