In an “Open Letter to the Republican Establishment” former U.S. Labor Secretary (under Bill Clinton) Robert Reich thunders his disapproval at crony pseudo-capitalists in the Republican Party.
You’ve tried to lift your share prices artificially by borrowing money at low interest rates and using it to buy back your shares of stock. But this party trick works only so long. Besides, interest rates are starting to rise.
In a market economy, there would be no way for businesses to use political pull to influence Federal Reserve policy. In fact, there would be no Federal Reserve.
The American economy soared prior to the existence of the Federal Reserve’s invention in 1913; since that time, we have had a series of booms and busts, including a Great Depression in the 1930s and a Great Recession in the early 21st Century.
You blame businesses, Mr. Reich, for using “party tricks” to manipulate interest and money. But if we operated on a gold standard, or some other form of private currency dictated by market forces, rather than by political ones, then pull would be nonexistent. There would be nothing to “pull.”
Second, you’ve instructed your Republican lackeys to reduce your and your corporation’s taxes so much over the last three decades — while expanding subsidies and bailouts going your way — that the government is running out of money.
Without the tax cuts of the 1980s, under President Reagan, as well as the capital gains tax relief provided under your boss, President Bill Clinton, business would have enjoyed even less profit. Tax cuts have no impact unless you provide relief first and foremost to the wealth creators.
If employees and workers are your first concern, how do you expect to take care of them without their bosses making profits? Do employees fare better in profitable companies, or bankrupt ones? The economy of the 1980s soared relative to the decades before and after it. This was under the lowest tax rates seen in America since the 1920s, low tax rates you decried both then and now.
That means many of the things you and your businesses rely on government to do — build and maintain highways, bridges, tunnels, and other physical infrastructure; produce high-quality basic research; and provide a continuous supply of well-educated young people — are no longer being done as well as they should. If present trends continue, all will worsen in years to come.
Well-educated young people? Where in the world have you found public schools that educate well?
More money is spent on federalized, nationalized public education than at any time in American history. Yet performance and standards continue to decline.
How will taxing businesses even more, to provide still more money to unaccountable public schools, who will never face going out of business, improve things? And why do you automatically assume that less money is the problem, with either roads or schools? Couldn’t the problem be the bad management inherent in any government enterprise?
For someone who doesn’t think much of capitalism, you seem to have a lot of confidence in the power and value of money. Who creates that money? The wealth-producers you now curse? The system of capitalism you want to abolish? Where is the money to come from, if not from the people whose self-interest and desire for profit you now condemn? Do you really think America’s economy is stagnating and suffocating from too much profit, or too little?
Finally, by squeezing wages and rigging the economic game in your favor, you have invited an unprecedented political backlash — against trade, immigration, globalization, and even against the establishment itself… Consumer spending comprises 70 percent of the American economy. But the typical family is earning less today than it did in 2000, in terms of real purchasing power.
The outcry I hear, whether from Bernie Sanders, Ted Cruz or Donald Trump, is all directed at career politicians. They’re angry at the government. The question here is whether government has been too socialist, or not socialist enough. Do we need more government intervention in the economy, or less? Obviously, you want more. We already have a ton, Mr. Reich.
How should government change? Obama used government to further socialize medicine and raise taxes. He pushed unprecedented regulation on the economy through the EPA and other agencies. More people depend on corporate and personal welfare — food stamps, Medicaid, and the like — than ever before.
Republicans in Congress gave Obama nearly everything he demanded, and increased non-defense spending to the highest levels in human history. How then do you explain the fact that real purchasing power has not increased in the last 16 years? Shouldn’t it have, after Obama?
How much socialism do we need to accomplish what you want? Or do you want an all-out Communist, anti-capitalist dictatorship?
The pent-up angers and frustrations of millions of Americans who are working harder than ever yet getting nowhere, and who feel more economically insecure than ever, have finally erupted. American politics has become a cesspool of vitriol.
Free markets and economic freedom promote individual responsibility and reward capability with profits and benefits for all involved. Economies, when left alone, aside from prosecuting force or fraud, offer hope to those who excel, and more jobs and prosperity to those who cannot or do not. It’s all about capability. Consumers decide, and the best man or woman ultimately wins.
Socialism, in contrast, breeds envy, resentment, and stagnation. It rewards political pull, as nobody prospers under socialism other than the connected. We already have tons of that. The corrupt connections between politicians and profit-makers arise from fascism/socialism, not real capitalism.
Why would you propose more of the same, Mr. Reich? That’s sadistic. Vitriol and hatred will always exist within some. But they could never become a dominant factor in a society where everybody keeps what people willingly pay them, whether it’s a hundred or a trillion dollars. Only criminals — and politicians — want the unearned.
If you want to get rid of the Republican Establishment, Mr. Reich, you’ve got to outlaw what Ayn Rand called the aristocracy of pull. How? Bring on economic freedom.
Real capitalism, not all-out socialism, will wash the cronies away.