June 20, 2019
In talking about learning lessons from the collapse of the housing bubble and Great Recession, E.J. Dionne and leaders of the Wall Street-funded Third Way group both showed they have not learned any lessons. Dionne approvingly quotes Matt Bennet, Third Way’s executive vice-president for public affairs:
“We need to be working to tame capitalism at this moment, because it is not functioning well, …”
The quote implies that upward redistribution of the last four decades is simply the result of untamed capitalism. That may be a convenient view for the beneficiaries of this upward redistribution (hey, it was just the natural workings of the market), but it is 180 degrees at odds with reality.
The longer and stronger and patent and copyright protection of the last four decades, which transfers many hundreds of billions of dollars upward each year (and is the reason prescription drugs are expensive) had nothing to do with an untamed market. This was the result of deliberately structuring of the market by Bennet’s political allies.
Similarly, the financial system has been structured to allow some people to get enormously rich while contributing nothing to the economy. This has included things like rewriting bankruptcy rules on home mortgages and derivatives to facilitate trading. It also means allowing private equity partners to ripoff public pension funds. And, it means that big banks enjoy too big to fail insurance.
And we structured our trade deals to put downward pressure on the wages of the 70 percent of the workforce without college degrees while protecting the most highly paid professionals, such as doctors and dentists. Also, beginning with Robert Rubin in the 1990s, we pushed for an over-valued dollar that put more downward pressure on the pay of less-educated workers.
It is absurd to pretend that the massive upward redistribution of the last four decades was just capitalism running wild. This upward redistribution was the deliberate design of the leadership of both political parties. (Yes, this is the topic of Rigged [it’s free].)
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