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Saving American capitalism

MATTHEW EDLUND
Guest Columunist
Edlundr@lbknews.com

It’s time to revive American capitalism – the competitive kind.  The political party that recognizes this opportunity will reap both the reform of the American republic and begin its own renaissance.

You don’t have to witness the overwhelming gilt of present private presidential palaces to recognize our new Gilded Age.  It’s another sign of the increased concentration of economic power.

You see it everywhere – in the diminishing number of Internet and telecommunication providers, of health insurance companies and airlines, pharmacy benefit and food/beverage combines. In the old days, leading companies might expect to make 50% of their “breakthrough profits” in their second decade.  Now it’s more like 80%.

Why?  Economic concentration leads to political clout. The Supreme Court decision of Citizen’s United, which made political bribery legal, quickly got noticed by Big Money.  Lobbying has recently increased to a $3.5 billion industry, but the truth is politicians and political power are now very cheap.  What is $3 billion a year to an entrenched health care industry whose overall revenues are a thousand times higher?  No wonder the Koch brothers have promised $400 million of their $1-2 billion new tax windfall to keep Republicans controlling the House of Representatives.  When you’re selling products like coal that much of the world wants to ban, that’s a smart business decision.

With the increase of industrial concentration have arrived renewals of the Social Darwinism of the 19th century’s Gilded Age, when plutocrats basked in the  glory that they were both God’s and Evolution’s elect.  Today’s ideologists  update this game declaring today’s business titans “earned” their great wealth through intelligence and entrepreneurial enterprise – a meritocratic elite which deserves everything their “stable genius” has produced.

But most Americans recognize that’s a con.  Yes there are talented businessman, but they know social class, educational advantages and sheer luck have a lot to do with who has and who doesn’t.  They just want a fair shake, what Franklin Delano Roosevelt called a “fair deal.”

How do you get it?  You start with the playbook of the Progressives of a hundred years ago who took on the earlier Gilded Age.  You bust monopolies and oligopolies like pharmacy benefit companies that benefit themselves more than anyone else (this appears one of the reasons why Amazon, Berkshire Hathaway and JP Morgan are combining forces in health care – they don’t like being ripped off .)  You emphasize  education and job training and use IT to do it. You remake crumbling infrastructure for the new knowledge economy.  You reform guild restrictions that keep folks from becoming hair dressers without passing numerous exams.  You push loans to new, small businesses.  You integrate business and education so people learn the new skills of a new economy.

The default party to benefit from a revival of American competitive capitalism is the Democrats.  The reason is sad – a Republican Party that prided itself as the apostle of capitalism and small, efficient government has been captured by the old, oligopolistic American businesses whose profits fatten on the anti-competitive government regulations they help write. So called “fiscal conservatives” now bust budget deficits with giant new handouts to old economy interests like coal, commercial real estate, finance and pharmaceuticals.  It’s no surprise newer parts of America’s economy, knowledge industries  like AI, tilt Democratic.  They don’t have much choice.  Witness the Secretary of State was formerly chairman of Exxon.

Reviving American competitive capitalism is now required.  American economic productivity has been poor for more than a decade. Wages have been stagnant.  Millenials know they’re going to lose, working to pay the increasing health care costs of a longer living population. And global competition is not just increasing but snapping at our heels.  It’s time to recognize what historian Paul Kennedy explained thirty years ago – global political and military strength derive from economic power.

Americans are very ready for a fair shake and a fair deal.  Reviving  competitive American capitalism can do more than increase American economic and global power.  It can decrease inequality, improve daily life for hundreds of millions, and revive a political system whose corruption is increasingly despised.  Reform is in the air. It deserves a competitive, fair deal.

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