A battered US economy is generating inequality and insecurity. Here’s how to fix it | James K Galbraith

sInterest rate setting, stock market plunge, gas price swings, dollar surge and chaos in global finance – we see in all this, once again, the folly of trying to run the world’s largest economy through a central bank. Time to rethink the basics: What happened in America? And what should be done?

Adam Smith He wrote: “Wealth, Hobbes says, is power.” Today in the United States we find islands of wealth and power on the one hand and an ocean of Accuracy And disability, along with poverty, on the other hand. This is the structural development Over 50 years, the impact of politics and policies, but also of industrial change, globalization and new technologies, with intense regional, social, demographic and political implications.

From the 1930s to the 1970s, America had a middle-class economy centered in the heart of the earth, feeding the world with machinery and goods while attracting labor from the impoverished South to the burgeoning Midwest — an economy of powerful labor unions and globally dominant corporations. This has become a two-tiered economy dominated by globalized finance, insurance, and high-end services on one coast, and information technology, space and entertainment on the other.

Finance and technology do not create many jobs, and doing business in these two sectors is predatory, predatory and shady Often in fraud. A few years ago, we calculated the rise in income inequality across counties during the boom years of the 1990s, and found that Half of the increase was due to income gains in only five provinces: Manhattan, Silicon Valley, Seattle. Since then, there have been other big gainers, but the fact remains: America’s biggest gains in income and wealth have become overwhelmingly concentrated in very few places, sectors, and people.

However, all the new jobs created in the last 30 years have been in the services field, and most of those are in thestagnant services“—An abundance of restaurants, retail stores, hospitals, clinics, offices, and entertainment venues fueled by household incomes (and borrowings) that exceed the requirements for material goods. Wages in these jobs are modest and employment is precarious. Families are compensated by the presence of two or more workers, each sometimes occupying Two or more jobs, where 50 years ago the norm was to earn a steady job and pay a living wage. Then Covid criticized the sector.

For better or worse, we can’t go back: globalization and the digital revolution are irreversible facts about life. White House June 2021 review of supply chain Explain it perfectly, using semiconductors, rare earths, batteries, and pharmaceuticals as examples. Our developed sectors need global markets – including China – as much as they need access to the world’s resources. American consumers benefit from imported goods and the efficiency of the information age.

The question is: what do we do now? We can modify and build a middle-class society that is just and secure, free of poverty and oligarchy alike, with tools that are widely familiar. These tools include:

Expansion of social insurance

Social Security, Medicare, Medicare, Unemployment Insurance, and Snap significantly reduce poverty, insecurity and hunger in America. It can be expanded and strengthened. If we can’t get Medicare for All, then Drop the maturity age to 55 – This will cover a large part of the most vulnerable population and reduce in one fell swoop the burden of private health insurance on employers.

Raising the minimum wage

Federal Minimum wage at $15 An hour will provide at least a 20% raise for all American workers. It will quickly solve the supposed problem of “labour shortage” – without harming any employer close to anyone else. It would also not encourage immigration, because American workers would rise to take up decently paid jobs.

Job guarantee implementation

Federal job guarantee is Well prepared suggestion It would eliminate involuntary unemployment, set a basic wage standard, and provide continuous employment for workers willing to take up useful projects, giving private sector employers a workgroup with which to easily hire the workers they need.

Energy price and supply stability

The TVA Other agencies provide stable strength under long-term contracts. Why should oil and gas be run private equity On the basis of boom and bust? Energy price and supply stability – through regulation, quotas, and price controls (as in Germany Immediately), long-term contracts and utilities – and many other problems will become much easier to solve.

Building public services and infrastructure and combating climate change

And do so while cutting commitments and military spending. The main task of infrastructure is to improve the quality of life, with clean water and air, good transport and communications, and – urgently – to change the mix of resources in order to mitigate as much as possible from global warming. We cannot meet these needs and at the same time devote our talents and resources to wars – the limits to that are clear after Afghanistan and Iraq. It is time to end the illusion that the United States can or should run the world.

Tax shift to land rent

great The principle of classical economics is that taxes should encourage business and enterprise while discouraging waste in both the public and private spheres. In the 1980s, taxes were shifted away from personal and corporate income and capital gains toward salaries and sales—the unsurprising result was the rise of an oligarchy of the super-rich. The remedy now is to tax these accumulations and the rents associated with them – land values, mineral rights, technology “semi-rents” – to return the new rich to the earth. A strong inheritance tax and gift can spur the transfer of significant fortunes to foundations and nonprofit organizations, such as hospitals, universities and churches, while working to prevent the emergence of financial and political dynasties.

Fix banking before it’s too late

The Glass-Steagall’s Law Protecting the middle class – the average depositor in a commercial bank – from the speculative whims of the elites. Today, big money is back in charge, despite the Great Financial Crisis – and many of the American public as well as the larger world are tired of it. Perhaps the hardest and most necessary reform is to reduce debt including student debt, reduce banks, restore effective regulation, prosecute fraud, and adjust financing to serve the greater good. This will take away the luster of being a banker — and the intoxicating power of running the Federal Reserve.

Is this program realistic? Maybe not. But keep in mind the path we’re taking. What I suggest is an alternative – for pitchforks and mess and Civil war.

  • James K. Galbraith holds the Lloyd M Bentsen Jr position in Government/Business Relations at the Lyndon B. Johnson School of Public Affairs at the University of Texas at Austin. In the 1970s, he formulated the monetary policy control provisions of the original version of Humphrey Hawkins’ Full Employment and Balanced Growth Act.

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