Politics and Markets: The World’s Political-Economic Systems by Charles E. Lindblom

I began reading this book sometime around 1978. I finished it today. I don’t remember why I stopped reading it the first time. Through the years, I thought about picking it up again but never did. Until a few weeks ago.

Charles Lindblom (1917-2018) was a Yale professor of politics and economics. In Politics and Markets, he categorizes and analyzes the different ways nations are organized, concentrating on the relative roles played by governments and markets in countries ranging from the United States and United Kingdom on one end of the continuum to China, the Soviet Union and Cuba on the other. Since the book was published in 1977, he pays a lot more attention to communism than he would do today.

Reading this book is strange at times. Lindblom is describing something in great detail that you might feel you already know. Don’t we all understand how governments and markets work? Well, not as well as Prof. Lindblom did. (Still, if you had to teach relatively advanced students from another planet about the way governments and businesses operate on Earth, starting from scratch, Politics and Markets would make a very good text.)

The book left me with two main thoughts. The first is hardly a revelation: all countries, even Cuba circa 1976, are hybrids. All countries have governments, of course. But all of them also employ so-called “free markets” as well. No society is totally planned by the government, for good reasons. Even the most pervasive governments use markets for various purposes, as when money is paid to acquire consumer goods or to attract employees to better-paying jobs.

This makes China’s transition from a communist country to a leading participant in world markets easier to understand. The Chinese have retained the one-party control of communism while doing a better job at capitalism than many of their capitalist competitors. The issue is always what mechanisms (laws, regulations, civic education) should be used to insure that businesses are successful while serving the health and welfare of society. Neither total government control of the economy nor total freedom for business would make sense. 

The other thought is more surprising. We often hear that democracy and capitalism work well together. They say it’s something to do with freedom. Yet there is a serious conflict between democracy and big business. Lindblom explains how the people who run businesses must be encouraged or induced to keep the economy functioning. If government officials interfere too much (from the business perspective), companies can stop producing sufficient amounts of the goods and services the rest of us need, at prices we can afford. They can also decide to pay us to little to live on or employ too few of us. If business people don’t produce enough or raise prices too much, there’s inflation; if they don’t pay us enough or hire enough of us, there’s deflation.. 

Because big corporations are so important to the economic life of a nation, the unelected owners and managers of these firms wield great power. From the book’s final paragraphs:

. . . It is possible that the rise of the corporation has offset or more than offset the decline of class as an instrument of indoctrination. That the corporation is a powerful instrument for indoctrination we have documented earlier. That it has risen to prominence in society as class lines have muted is clear enough. That it creates a new core of wealth and power for a newly constructed upper class, as well an an overpowering loud voice, is also reasonably clear. 

The executive of the large corporation, is on, on many counts, the contemporary counterpart to the landed gentry of an earlier era, his voice amplified by the technology of mass communication. A single corporate voice on television, it has been estimated, can reach more minds in one evening than were reached from all the platforms of all the world’s meetings in the course of several centuries preceding broadcasting. More than class, the major specific institutional barrier to fuller democracy may therefore be the autonomy of the private corporation.

It has been a curious feature of democratic thought that it has not faced up to the private corporation as a peculiar organization in an ostensible democracy. Enormously large, rich in resources, the big corporations, we have seen, command more resources than do most government units. They can also, over a broad range, insist that government meet their demands, even if these demands run counter to those of citizens expressed through their polyarchal [rule by the many] controls. Moreover, they do not disqualify themselves from playing the partisan role of a citizen — for the corporation is legally a person. And they exercise unusual veto powers. They are on all these counts disproportionately powerful, we have seen. The large private corporation fits oddly into democratic theory and vision. Indeed, it does not fit.

Lindblom doesn’t offer a solution, although he thinks more corporations might be treated like defense contractors or public utilities. The government would guarantee their profits while exerting significant control over their operations.

And with that, Charles Lindblom’s Politics and Markets can safely return to a bookcase to sit quietly for another 40 years. That’s if it escapes the recycling bin, or a natural disaster, since even excellent books don’t live forever.

Decisions, Decisions

Our mail-in ballots arrived today. I’m wondering if I should vote for the candidate who’s a decent person with a substantial record of government service? Or his opponent, a horrible person with a history of deceit and fraud? Further down the ballot, should I vote for candidates who will help the next president achieve his goals or the ones who will do everything possible to make him fail? Hmm.

One reason to vote for Biden and members of his party is that, despite what many think, Democratic presidents have a better record on the economy than Republican presidents. Paul Krugman of the City University of New York and the New York Times explains:

[On Monday night], Joe Biden claimed that his tax and spending plans would create millions of jobs and promote economic growth. Txxxx claimed that they would destroy the economy.

Well, everything we know suggests that Biden was right and Txxxx wrong. And I’m not the only one saying this. Nonpartisan analysts like Moody’s Analytics and the not-exactly-socialist economists at Goldman Sachs are remarkably high on Biden’s proposals. . . .

There’s a widespread perception that Republicans are better than Democrats at managing the economy. But that’s not at all what the record says.

Yes, Ronald Reagan presided over a long economic expansion; but so did Bill Clinton, and the Clinton boom was both longer and bigger. The economy did in fact add many jobs under Txxxx before the coronavirus struck, but this simply represented the continuation of an expansion that began under Barack Obama.

And those were the good stretches. Both Bushes presided over really poor economic performance.

Republicans also have a long history of claiming that progressive policies would lead to economic disaster. They’ve been wrong every time.

They’ve been wrong about tax hikes: When Clinton raised taxes in 1993, Republicans confidently predicted recession, but what actually happened was a huge boom. When California raised taxes under Jerry Brown, the right called it “economic suicide”; again, the economy boomed.

They’ve also been wrong about social programs. Obamacare, the G.O.P. insisted, would destroy millions of jobs. One of the dozens of attempts to repeal the Affordable Care Act was actually called the “Repealing the Job-Killing Health Care Law Act.” Yet in the six years after January 2014, when the act went into full effect, the economy added almost 15 million jobs.

And let’s not forget the flip side, the many, many times Republicans promised that cutting taxes on the rich would produce an economic miracle, promises that never came true. There’s a reason conservatives still go on and on about the Reagan boom, all those years ago; it’s the only example they have that even seems to support their economic ideology. (It doesn’t, but that’s another topic.)

But there’s a difference between saying that progressive policies are not the disaster conservatives claim and saying that Biden’s plan would actually promote growth. Why are Moody’s and Goldman Sachs so high on his proposals? Why do I share that optimism?

First, the background. Even before the coronavirus, good employment numbers could hide underlying economic weakness. For at least the past decade, we’ve been living in a world of excess savings: the amount the private sector saves persistently exceeds the amount it spends on real investments. This savings glut is reflected in low interest rates, even when the economy is strong.

Low interest rates, in turn, limit the ability of the Federal Reserve to fight downturns, which is why Jerome Powell, the Fed’s chairman, has been pleading for more fiscal stimulus.

In today’s world, then, we actually want the government to run budget deficits, because they put excess savings to use. But we also want those deficits to be productive — to boost investment, and strengthen the economy in the long run.

The 2017 Txxxx tax cut flunked that test. It increased the budget deficit, but the main driver of that red ink — a huge cut in corporate taxes — utterly failed to yield the promised surge in business investment.

Biden’s plan would roll back that corporate tax cut, replacing it with spending programs likely to yield much more bang for the buck. In particular, much of the spending would be on infrastructure and education — that is, outlays aimed at strengthening the economy in the long run, as well as boosting it over the next few years.

When Moody’s ran this program through their model, it concluded that by the end of 2024, real gross domestic product would be 4.5 percent higher than under a continuation of Txxxx’s policies, translating into an additional 7 million jobs. Goldman Sach’s estimates are similar: a 3.7 percent gain in G.D.P.

Now, a model is only a model, and economists’ predictions are often wrong (although some of us are willing to acknowledge error and learn from our mistakes).

But if you’re trying to assess the candidates’ economic claims, you should know that Txxxx’s predictions of a Biden bust lack credibility, not just because Txxxx lies about everything, but because Republicans always predict disaster from progressive policy, and have never yet been right.

And you should also know that Biden’s assertions that his plan would give the economy a significant boost are well grounded in mainstream economics and supported by independent, nonpartisan analyses. . . .

Unquote.

There’s a simple reason why Democrats do better. They believe in sharing the wealth. Republicans don’t.

Hmm. I think we should go with the Democrats.

Smiles from 1967, 2004, 2011 and even 2002

After releasing Pet Sounds and “Good Vibrations” in 1966, Brian Wilson tried to keep it all going with Smile in 1967. Things didn’t work out, so Smile became rock music’s most famous, most well-regarded, unfinished, semi-existing album. Brian and the other Beach Boys went on to lesser things (as did Brian’s lyricist for the project, Van Dyke Parks), while the legend of Smile grew.

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I use the word “legend” because in this case it’s appropriate. The story was told again and again. Unreleased recordings were quietly shared. Speculation abounded among certain Beach Boys fans. Would the group ever finish Smile? What would it be like when we finally got to hear it? What would people have thought in 1967 if Smile had come out before Sergeant Pepper? The Beach Boys and Beatles were having a friendly competition in the mid-60s. We know how that came out.

Brian Wilson, having begun a solo career in the 80s, changed the Smile story in a big way in 2004. Overcoming considerable obstacles, he and his band debuted Smile at a February concert in London. From The Guardian:

So how good, finally, is Smile, the great lost song cycle that Brian Wilson kept the world waiting 37 years to hear? The only possible answer, after Friday night’s world premiere in London, is that it is better than anyone dared hope. Multiple spontaneous ovations were the reward for the former Beach Boy and his musicians, whose pristine performance breathed life into a 45-minute work previously known only through various shattered and dispersed fragments.

Seven months later, Brian Wilson presented us with Brian Wilson Presents Smile. Metacritic, a site that tries to synthesize critical opinion, has it down as the third-best reviewed album of the 21st century:

Well, better 37 years late than never. Originally intended to be the Beach Boys’ 1967 follow-up to their legendary ‘Pet Sounds,’ ‘Smile’ was finally recorded as originally intended in April 2004 by Wilson and his current band, including co-songwriter Van Dyke Parks.

“Originally intended” is a stretch, since nobody, including Mr. Wilson, really knows how he intended to put Smile‘s pieces together in 1967. (Not being able to put the pieces together was a very big part of the problem.)

In 2011, Capitol Records released a big set of Beach Boys recordings from the 60s, The Smile Sessions, also to great acclaim. And that was that.

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Except that while we were waiting those 37 years, a number of us (hundreds of us? thousands?) created our own versions of Smile, using whatever pieces were available (legally and otherwise). I did one in 2002, two years before Brian did. If only he’d asked me for help in 1967!

Mine differs from the typical unofficial arrangement, mainly in two ways. I started with something someone put together from mostly instrumental tracks and called “The Elements”. I think it’s an excellent prelude to what comes later. I also used a version of the song “Wonderful” from the Smiley Smile album (what the Beach Boys released in lieu of Smile), not the original “Wonderful” with a harpsichord that most fans seem to prefer. I like the later one a lot more.

Anyway, here’s my Smile from 2002 in two formats up in the Microsoft cloud (YouTube objected due to copyright):

Audio only (MP3, 55 mb)

Audio plus unsophisticated video that identifies the tracks (MP4, 52 mb)

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(By the way, whether or not you watched any of that ridiculous “debate”, please vote and send the maniac back to private life and almost certain criminal prosecution.)

Let the Pendulum Swing

Two social scientists predicted that America was facing the Turbulent Twenties, based on their study of historical patterns. History shows how to calm things down and improve people’s lives. Here’s most of their article from Noema magazine: 

Almost three decades ago, one of us, Jack Goldstone, published a simple model to determine a country’s vulnerability to political crisis. The model was based on how population changes [affected] state, elite and popular behavior. Goldstone argued that, according to this Demographic-Structural Theory, in the 21st century, America was likely to get a populist, America-first leader who would sow a whirlwind of conflict.

Then ten years ago, the other of us, Peter Turchin, applied Goldstone’s model to U.S. history, using current data. What emerged was alarming: The U.S. was heading toward the highest level of vulnerability to political crisis seen in this country in over a hundred years. Even before Txxxx was elected, Turchin published his prediction that the U.S. was headed for the “Turbulent Twenties,” forecasting a period of growing instability in the United States and western Europe. . . .

Our model is based on the fact that across history, what creates the risk of political instability is the behavior of elites, who all too often react to long-term increases in population by committing three cardinal sins.

First, faced with a surge of labor that dampens growth in wages and productivity, elites seek to take a larger portion of economic gains for themselves, driving up inequality.

Second, facing greater competition for elite wealth and status, they tighten up the path to mobility to favor themselves and their progeny. For example, in an increasingly meritocratic society, elites could keep places at top universities limited and raise the entry requirements and costs in ways that favor the children of those who had already succeeded.

Third, anxious to hold on to their rising fortunes, they do all they can to resist taxation of their wealth and profits, even if that means starving the government of needed revenues, leading to decaying infrastructure, declining public services and fast-rising government debts.

Such selfish elites lead the way to revolutions. They create simmering conditions of greater inequality and declining effectiveness of, and respect for, government. But their actions alone are not sufficient. Urbanization and greater education are needed to create concentrations of aware and organized groups in the populace who can mobilize and act for change.

Top leadership matters. Leaders who aim to be inclusive and solve national problems can manage conflicts and defer a crisis. However, leaders who seek to benefit from and fan political divisions bring the final crisis closer. Typically, tensions build between elites who back a leader seeking to preserve their privileges and reforming elites who seek to rally popular support for major changes to bring a more open and inclusive social order. Each side works to paint the other as a fatal threat to society, creating such deep polarization that little of value can be accomplished, and problems grow worse until a crisis comes along that explodes the fragile social order.

These were the conditions that prevailed in the lead-up to the great upheavals in political history, from the French Revolution in the eighteenth century, to the revolutions of 1848 and the U.S. Civil War in the nineteenth century, the Russian and Chinese revolutions of the twentieth century and the many “color revolutions” that opened the twenty-first century. So, it is eye-opening that the data show very similar conditions now building up in the United States.

In applying our model to the U.S., we tracked a number of indicators of popular well-being, inequality and political polarization, all the way from 1800 to the present. These included the ratio of median workers’ wages to GDP per capita, life expectancy, the number of new millionaires and their influence on politics, the degree of strict party-line voting in Congress, and the incidence of deadly riots, terrorism and political assassinations. We found that all of these indicators pointed to two broad cycles in U.S. history.

In the decades following independence, despite growing party competition, elites in office often compromised and voted together, and rising national prosperity was broadly shared. But that wave of positive conditions peaked around 1820; from there, political polarization and economic inequality rose sharply in the years leading up to the Civil War. The crisis indicators peaked in the 1860s but . . . they remained high until 1920 (the years of Reconstruction, Jim Crow, the Gilded Age, violent labor unrest, and the anarchists).

Then, the tide shifted, and a second wave of greater unity and prosperity began to gather strength. Contrary to expectations, World War I and the Great Depression did not produce a rise in political instability indicators. Instead, the country pulled together. The reforms introduced during the Progressive Era and clinched in the New Deal reduced inequality and strengthened the economic share of workers; during and after World War II, the country agreed on new tax policies and increased spending on roads and schools.

The 1950s were a golden age of worker progress and party cooperation; even in the 1960s and 1970s, despite serious racial conflicts, the country’s leaders were able to agree on remarkably far-reaching reforms to improve civil rights and environmental protection. However, the 1960s were a high point in our indicators of political resilience; in the 1970s and 1980s, things began to turn, and by the 1990s, a new wave of rising inequality and political divisions was well underway, exemplified by Newt Gingrich’s policies as speaker of the House. In the next two decades, the crisis indicators rose just as sharply as they had in the decades before the Civil War. It was not just that by the late 2010s, overall inequality was rising to the levels not seen since the Gilded Age; median wages in relation to GDP per capita also were falling to historically low levels.

Writing in the journal Nature in 2010, we pointed out that such trends were a reliable indicator of looming political instability and that they “look set to peak in the years around 2020.” In Ages of Discord, published early in 2016, we showed that America’s “political stress indicator” had turned up sharply in recent years and was on track to send us into the “Turbulent Twenties.”

The Political Stress Index (PSI) combines the three crisis indicators in the Goldstone-Turchin theory: declining living standards, increasing intra-elite competition/conflict and a weakening state. Growing PSI indicates increased likelihood of political violence. The Well-Being Index indicates greater equality, greater elite consensus and a more legitimate state.

This year, the COVID-19 pandemic and the death of George Floyd at the hands of the Minneapolis police have delivered a double-barreled crisis to U.S. politics. America has reacted with a nationwide, months-long series of urban protests. But this explosion of protest is not just the result of this year’s events. The U.S. has weathered epidemics and racial protests before and produced legislation that made the country better as a result.

What is different this decade is that these events are occurring at a time of extreme political polarization, after decades of falling worker’s share in national income, and with entrenched elite opposition to increased spending on public services. These trends have crippled the U.S. government’s ability to mount an effective response to the pandemic, hampered our ability to deliver an inclusive economic relief policy and exacerbated the tensions over racial injustice that boiled over in response to the video of Floyd’s death.

Is the U.S. likely headed for still greater protests and violence? In a word, yes. Inequality and polarization have not been this high since the nineteenth century. . . .

American exceptionalism was founded on cooperation — between the rich and the poor, between the governors and the governed. From the birth of the nation, the unity across economic classes and different regions was a marvel for European observers, such as St. John de Crèvecoeur and Alexis de Tocqueville. This cooperative spirit unraveled in the mid-nineteenth century, leading to the first “Age of Discord” in American history. It was reforged during the New Deal as an unwritten but very real social contract between government, business and workers, leading to another age of prosperity and cooperation in postwar America. But since the 1970s, that contract has unraveled, in favor of a contract between government and business that has underfunded public services but generously rewarded capital gains and corporate profits.

While this new neoliberal [i.e., conservaive, pro-corporate] contract has, in some periods, produced economic growth and gains in employment, growth has generally been slower and far more unequal than it was in the first three postwar decades. In the last twenty years, real median household income has stagnated, while the loss of high-paying blue-collar jobs to technology and globalization has meant a decline in real wages for many workers, especially less educated men.

As a result, American politics has fallen into a pattern that is characteristic of many developing countries, where one portion of the elite seeks to win support from the working classes not by sharing the wealth or by expanding public services and making sacrifices to increase the common good, but by persuading the working classes that they are beset by enemies who hate them (liberal elites, minorities, illegal immigrants) and want to take away what little they have. This pattern builds polarization and distrust and is strongly associated with civil conflict, violence and democratic decline.

At the same time, many liberal elites neglected or failed to remedy such problems as opiate addiction, declining social mobility, homelessness, urban decay, the collapse of unions and declining real wages, instead promising that globalization, environmental regulations and advocacy for neglected minorities would bring sufficient benefits. They thus contributed to growing distrust of government and “experts,” who were increasingly seen as corrupt or useless, thus perpetuating a cycle of deepening government dysfunction.

How can Americans end our current Age of Discord? What we need is a new social contract that will enable us to get past extreme polarization to find consensus, tip the shares of economic growth back toward workers and improve government funding for public health, education and infrastructure.

This sounds like commonplace leftist discourse and a weak response to such extreme conditions. Let us therefore drive home both the urgency of the crisis and the possibility of changing course by looking at two historical cases where countries teetered on the brink of calamity but managed to pull back and forge a new path to progress.

The United Kingdom in the 1820s was coming apart. After defeating Napoleon, the Duke of Wellington became the leader of an elite group that sought to maintain the dominance of the traditional landlord elites. As prime minister and then leader of the House of Lords, Wellington sought to ignore, rather than adjust to, the new realities of the booming cities of Birmingham, Manchester and other burgeoning cities of the fast-growing industrial economy. Meanwhile, the workers of these cities demanded political reforms that would give them a voice in Parliament.

These workers particularly objected to the infamous “Corn Laws,” which, by placing tariffs on imports of foreign grain, kept the costs of food (and hence the profits of English landlords) high and the real wages of workers low. Following a major workers’ protest in Manchester in 1819, which was dispersed with a cavalry charge into the crowd that left an estimated 10 to 20 dead and hundreds injured (the so-called Peterloo massacre), politics in Britain became even more sharply polarized. This became one of the first incidents widely reported by journalists, and indignation spread across the country.

Nonetheless, Wellington not only refused any legal changes, he sought to clamp down on the agitation for voting reforms. New laws were passed to expand police power and block public assemblies; newspapers were closed; protestors and journalists were jailed. Still, popular agitation continued, and there was even an attempt to assassinate several cabinet ministers. The rapid growth of the industrial workforce and the new manufacturing economy produced similar pressures for radical political change across Europe, leading to waves of revolutions in 1830 and 1848. Many in Britain expected a similar outcome, yet the country avoided revolution throughout these years.

The solution was for leaders to accept the Reform campaign, which sought voting reforms that would reduce the power of the landlords and support the new industrial working class. After the growing confrontations of the 1820s, in 1830, Wellington’s Tories lost control of Parliament, and a Whig leader who supported the Reform campaign, Lord Grey, became prime minister. Grey’s initial efforts to pass a Reform bill were frustrated, and Grey threatened to have the King create enough additional Whig peers to force the bill through. The Tories then relented, and in 1832, Parliament passed the first Reform bill, which expanded the franchise, undermined the clientage of the landed elite and gave representation to the residents of the factory cities. Additional Reform bills followed, allowing Britain, despite continued large-scale workers’ movements, to avoid the revolutions that wracked the continent and emerge as the leading economy of Europe.

A century later, it was the United States that was coming apart. In the early 1930s, democracy was retreating in Europe while the U.S. economy had fallen into a depression, with a dust bowl in the Great Plains and millions of industrial workers losing their jobs. Prohibition had heightened cultural conflict and crime, while nativist demagogues (such as radio personality Father Coughlin and Louisiana Governor Huey Long) stirred fear.

Then in 1932, Americans voted for change. Franklin Delano Roosevelt replaced Herbert Hoover as president and undertook a sweeping reform program to restore work and shared prosperity. Labor organizations were strengthened, and public works programs provided jobs for construction workers, craftsmen and artists. The resulting buildings were decorated with monuments to the dignity of labor. It took years to transition to an economy based on mechanization, skilled labor, strong unions and public education, but the result was a country strong enough to fight the rising tide of global fascism and emerge as the world’s leading economy.

The formula in both cases was clear and simple. First, the leader who was trying to preserve the past social order despite economic change and growing violence was replaced by a new leader who was willing to undertake much-needed reforms. Second, while the new leader leveraged his support to force opponents to give in to the necessary changes, there was no radical revolution; violence was eschewed and reforms were carried out within the existing institutional framework.

Third, the reforms were pragmatic. Various solutions were tried, and the new leaders sought to build broad support for reforms, recognizing that national strength depended on forging majority support for change, rather than forcing through measures that would provide narrow factional or ideologically-driven victories. The bottom line in both cases was that adapting to new social and technological realities required having the wealthy endure some sacrifices while the opportunities and fortunes of ordinary working people were supported and strengthened; the result was to raise each nation to unprecedented wealth and power.

To be sure, the path back to a strong, united and inclusive America will not be easy or short. But a clear pathway does exist, involving a shift of leadership, a focus on compromise and responding to the world as it is, rather than trying desperately to hang on to or restore a bygone era.

This has already been, and will continue to be, a violent year in America. . . . It will take heroic efforts to rebuild the political center, to join businesses and workers in partnership and consensus, and to restore fairness in both taxation and public spending. Only if all sides can again recover a stake in our government, no matter which party controls it, can we avoid sliding into a crisis that will undermine our Constitution and pit Americans against each other in a way we have not seen for generations.

Unquote.

Yes, if more of us vote this year, the pendulum can swing and we can set this country on a progressive path.

Bad News (a Long Read)

Looking out the window in a pleasant neighborhood, you don’t see the problems. But they’re very real.

This is the headline of an article in Time written by a businessman and a former labor leader: “The Top 1% of Americans Have Taken 50 Trillion Dollars from the Bottom 90%”:

Like many of the virus’s hardest hit victims, the United States went into the COVID-19 pandemic wracked by preexisting conditions. A fraying public health infrastructure, inadequate medical supplies, an employer-based health insurance system perversely unsuited to the moment—these and other afflictions are surely contributing to the death toll. But in addressing the causes and consequences of this pandemic—and its cruelly uneven impact—the elephant in the room is extreme income inequality.

How big is this elephant? A staggering $50 trillion. That is how much the upward redistribution of income has cost American workers over the past several decades.

This is not some back-of-the-napkin approximation. According to a groundbreaking new working paper by Carter C. Price and Kathryn Edwards of the RAND Corporation, had the more equitable income distributions of the three decades following World War II (1945 through 1974) merely held steady, the aggregate annual income of Americans earning below the 90th percentile would have been $2.5 trillion higher in the year 2018 alone. That is an amount equal to nearly 12 percent of [Gross Domestic Product] —enough to more than double median income—enough to pay every single working American in the bottom [90%] an additional $1,144 a month. Every month. Every single year.

Price and Edwards calculate that the cumulative tab for our four-decade-long experiment in radical inequality had grown to over $47 trillion from 1975 through 2018. At a recent pace of about $2.5 trillion a year, that number we estimate crossed the $50 trillion mark by early 2020. That’s $50 trillion that would have gone into the paychecks of working Americans had inequality held constant—$50 trillion that would have built a far larger and more prosperous economy—$50 trillion that would have enabled the vast majority of Americans to enter this pandemic far more healthy, resilient, and financially secure. . .

At every income level up to the 90th percentile, wage earners are now being paid a fraction of what they would have had inequality held constant. . . .On average, extreme inequality is costing the median income full-time worker about $42,000 a year. Adjusted for inflation using the [Consumer Price Index], the numbers are even worse: half of all full-time workers (those at or below the median income of $50,000 a year) now earn less than half what they would have [if] incomes . . . continued to keep pace with economic growth. And that’s per worker, not per household.

The next article I read was written for the Times Literary Supplement by a Columbia University researcher. “The Rich and the Rest” is a review of three books. The first book describes how corporate America and the rich have waged a successful war on science for the past seventy years:

A succession of administrations have frayed the social safety net and dismantled regulatory controls. Corporate money has bought unprecedented influence in electoral campaigns and reaped unprecedented political power in return. In The Triumph of Doubt: Dark Money and the Science of Deception, the epidemiologist David Michaels details many of the victories these corporate interests have won. Michaels, the former head of the Occupational Safety and Health Administration under the Barack Obama administration, spent years weighing the survival of workers and citizens against the short-term profits of corporations. In his book, he documents not only a shocking disregard for human welfare on the part of big business, but also a co-ordinated effort to compromise the culture of knowledge itself.

Michaels painstakingly explains the way medical researchers have documented the dangers of certain consumer products and industrial processes, beginning with smoking. . . . One early study “found that heavy smokers were fifty times as likely as non-smokers to contract lung cancer”. This was terrible news for the tobacco industry, which had burgeoned with the wartime practice (in both world wars) of issuing cigarettes to soldiers as standard rations. And so the industry responded by commissioning a public relations expert to set up a “research committee” to contest the findings. Unfortunately, the findings were solid, so the mission became the manufacture of doubt. Did tobacco use cause lung cancer? The evidence suggested that it did. Was tobacco the only cause of lung cancer? Of course not. So carcinogens like asbestos and radon became excuses for quashing public health measures concerning tobacco. Over time, an army of publicists, lawyers and corrupt scientists was assembled to prolong the public agony in the interest of squeezing every last nickel from the trade.

. . . Chapter by chapter, case by case, Michaels marches through the many ways corporate greed has co-opted science, law and government, in each case following the model set by Big Tobacco. . . .

Michaels’s book follows in the distinguished footsteps of the historians of science Naomi Oreskes and Erik M. Conway, whose Merchants of Doubt (2010) described how Big Tobacco’s proxies segued into climate change denial. Once again, even when the science was near unanimous, the purveyors of fossil fuels and industrial contaminants saturated the public sphere with specious arguments and outright falsehoods. In recent years oil companies have busily diversified and invested in alternative energy, but they have simultaneously waged war against environmental regulations to maximize every bit of profit from the existing industry before they abandon it, regardless of the human cost.

The second book tells the story of the fabulously wealthy Koch family. It was Fred Koch, a chemical engineer, who saw a great opportunity during the Texas oil boom in the early 20th century:

Fred cleverly predicted that subsidiary industries such as refineries and pipelines would pave the way to great fortunes. He was more concerned with profits than with politics – he built refineries for both Stalin and Hitler – and, while a highly successful businessman, he remained a fairly ordinary oil magnate: it took his sons to transform the company into a political and economic powerhouse. As Christopher Leonard writes in Kochland: The Secret History of Koch Industries and Corporate Power in America, Charles Koch, who was made company president in 1966, despised New Deal America.

His response was to create “a political influence network that is arguably the most powerful and far-reaching operation ever run out of an American CEO’s office … Charles Koch’s political vision represents one extreme pole in the ongoing debate about the role of government in markets; a view that government should essentially protect private property and do little else”. . . .

[Charles] turned the full beam of his method to politics in 2008, when the Obama administration and the Democratic Congress began to draft policies to respond to the climate crisis, endangering fossil fuel profits.

Koch and his associates have created a political assembly line to fund, organize and publicize an opposition. His donors’ gatherings . . . have collected millions of dollars, which have then funded organizations such as the American Legislative Exchange Council (ALEC), which in turn have leveraged influence-peddling among state legislators, and funded faux “grassroots” (or “astroturf”) organizations, such as Americans for Prosperity. These have orchestrated demonstrations and door-to-door canvassing during elections. Koch-funded groups have subverted language with Orwellian flair: Americans for Prosperity promotes regressive tax policies and wage suppression; the Heartland Institute promotes the despoliation of the American landscape by sowing doubt about climate and environmental hazards.

The review’s third book deals with America’s “compound epidemic of addiction, alcoholism and suicide”, an epidemic that obviously predated Covid-19:

The Princeton economists Anne Case and Angus Deaton survey this tragic landscape in Deaths of Despair and the Future of Capitalism. Case and Deaton call this situation the dark side of meritocracy, in which “the less educated are devalued and disrespected”. In this view, the collapse of social constructs, including marriage, institutional religion and trade unions, leaves people unmoored and their interests undefended. And while the elites of the past often regarded noblesse oblige and charity as the obligations of privilege and faith, modern American meritocracy, rooted in the founding religion of Calvinism, suggests that the happy “elect” are deserving of their good fortune, and that the “losers” are simply reaping what they sow. To help them is throwing good money after bad. Better to spend it on a sports arena.

The upshot is dire. The US has the highest infant mortality rate and the lowest life expectancy among industrialized nations – a situation that the Covid-19 crisis has cast into sharp relief. The US accounts for 4 per cent of the world’s population but more than 25 per cent of global deaths from the pandemic. . . .

Nowhere are the flaws of unfettered capitalism better illustrated than in the opioid crisis (here as in Michaels’s book). It is a tragically familiar tale: a powerful pharmaceutical company creates a new market for addictive painkillers by encouraging and incentivizing doctors to record pain levels as the fifth vital sign (after temperature, pulse, respiration and blood pressure). Once this subjective symptom is recorded, the drug can be prescribed, having been falsely advertised as unlikely to lead to addiction. Billions of dollars in profit are then realized, at a dire cost: to this day millions remain addicted; more than 67,000 Americans died from overdoses in 2018 alone. In this cycle of immiseration, a dysfunctional society breeds pain, then creates a revenue stream from a treatment that infinitely compounds it.

Yet millions of voters, in particular struggling White men with high school educations, support the Republican Party, the party of big business. They have their reasons, despite the fact — revealed by the study described in that Time article — that “by far the single largest driver of rising inequality these past forty years has been the dramatic rise in inequality  between white men”. Again from the Time article:

The $50 trillion transfer of wealth the RAND report documents has occurred entirely within the American economy, not between it and its trading partners. . . . [This] upward redistribution of income, wealth, and power wasn’t inevitable; it was a choice—a direct result of the trickle-down policies we chose to implement since 1975.

We chose to cut taxes on billionaires and to deregulate the financial industry. We chose to allow CEOs to manipulate share prices through stock buybacks, and to lavishly reward themselves with the proceeds. We chose to permit giant corporations, through mergers and acquisitions, to accumulate the vast monopoly power necessary to dictate both prices charged and wages paid. We chose to erode the minimum wage and the overtime threshold and the bargaining power of labor. For four decades, we chose to elect political leaders who put the material interests of the rich and powerful above those of the American people.

I’ll conclude this avalanche of dysfunction with a passage from a densely-written classic, Politics and Markets, by Charles Lindblom (I’m going to finish it this time). It was published, coincidentally or not, in 1976:

One obstruction to polyarchy [rule by the many] is the privileged position of businessmen [by which Lindblom means their tremendous control over the functioning of a nation’s economy]. It is a rival . . . to the polyarchal control of government [since government must induce businessmen to keep the economy going]. Another obstruction is the disproportionate influence of businessmen in interest-group, party and electoral politics. It permits businessmen to win . . . disproportionately in their many polyarchal struggles. . . But now suppose that the business influence strikes even deeper in a particular way. Consider the possibility that businessmen achieve an indoctrination of citizens so that citizens’ volitions serve not their own interests but the interests of businessmen. The privileged position of business comes to be widely accepted. In electoral politics, no great struggle need be fought [202] . . . 

. . . Despite universal suffrage, income distribution in the polyarchies [like the US and UK] has not changed greatly. . . In few of the polyarchies is there serious discussion, even among the politically active, of major alterations of the distribution of wealth and income. And citizens are extraordinarily ignorant on the issue. . . [208].

Two recent studies of British working-class attitudes and opinions agree in finding both a narrow range of opinion and widespread deference of working class to upper class — this in a society many of whose nineteenth-century leaders feared that universal suffrage would bring about demands for a more equal sharing of income and wealth, so obviously advantageous did they see such policies for the mass of voters. It is one of the world’s most extraordinary social phenomena that masses of voters vote very much like their elites. They demand very little for themselves [208-209].

Lindblom was calling attention to economic inequality before America became vastly more unequal. Now the public is more aware of inequality, but that’s because inequality is so much worse. Nevertheless, “masses of voters [continue to] vote very much like their elites”. What would the professor make of our situation in the year 2020? (I bet he’d recommend voting.)