Hedrick Smith -- Who stole the American dream
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Two important points: (1) the social contract has been discarded,
and (2) those who have the predominance of political and economic
power are almost all on what would have been one side of that former
"contract".  Abrogating that contract has been done willfully and
with great financial advantage to the rich and powerful in the U.S.

Unimpeded, free market capitalism has concentrated wealth and
shifted wealth toward the upper economic tiers in the U.S.  And,
because our political system give unrestricted access to the
political process through money and contributions, the result is a
concentration of political power, too.

That system now seems to be in a positive feedback mode: more
economic power and wealth leads to more political influence and
power, which in turn results in more wealth and economic power, etc.

According to Smith, more and more, over the last 10 to 20 years,
capitalist and corporate interests have gotten what they want: (1)
Corporate profits and support for share prices are given priority at
the expense of employee wages and benefits.  (2) Corporations have
shifted responsibility for retirement from the corporation and
employer to the individual employee, for example, eliminating
defined benefit plans and replacing them with 401-K plans.  (3)
Corporations and employers have eliminated and reduced health care
benefits and coverage with little counter balancing attempt by the
U.S.  Federal government to replace that reduced coverage.

Why?  What are the enablers for this shift?  (1) Members of
America's corporate power elite have decided to take a much bigger
share of business earnings for themselves at the expense of
employees.  (2) There has been an increasingly pro-rich,
pro-business policy tilt in Washington, D.C., and this is happening
at the state level, too.  (3) The Republican party have been blatant
supporters of tax cuts for the rich, while support for the rich and
for corporate interests by the Democratic party is not so blatant
but does assist in the process.

One significant enabler of this process is the Citizens United
decision by the U.S. Supreme Court, which has resulted in the
formation of super-PACs, and, in turn, in unlimited political
spending by corporations and the rich.  What's more, the influence
of business and the wealthy now vastly out-weighs that of organized
labor in Washington, D.C. and at the level of state governments.

Smith claims that political scientists have found that the U.S.
Congress responds to the affluent and to donors, and that it ignores
voters who do not contribute financially (in particular, to their
campaign funding).  This means that influence of policy outcomes
goes almost exclusively to the rich.

What we might hope for is a tipping point or a pendulum swing that
might send us back toward a more balanced condition.  But, nothing
like that seems likely now, and if and when a Republican replaces
Barack Obama in the White House, this imbalance is likely to get
much worse.

Smith describes the Wal-mart model, which puts huge pressure on
suppliers and manufactures to reduce prices.  Yes, that results in
cheaper goods for consumers, but it also means reduced wages, often
abroad in China) and makes it almost impossible for domestic
produces to compete successfully.

Once again, free market, fundamentalist, purist capitalism results
in (1) large U.S. trade deficits and (2) the loss of millions of
domestic jobs.

Smith lets us know that knowledge workers and knowledge oriented
industries have not been spared from this process.  Work that is IT
oriented can often be sent overseas where it can be performed by
skilled but lower wage workers.  There are companies that specialize
in supplying low wage but skilled and knowledgeable workers from
overseas, especially India, to work in the U.S.  Plus, more and more
research is being done in China.

The skills gap is a myth, according to Smith.  But, it is no myth
that U.S. corporations are replacing skilled and knowledgeable
workers with cheaper ones abroad.

In the last major sections of the book, Smith explains both (1) why
we can't get a fix and (2) what the fixes should be.  It's not an
encouraging picture.

But, Smith does give a good summary of what is wrong and needs to be
fixed: (1) strident partisanship; (2) unyielding ideology; (3) a
corrosive and corrupting system of campaign financing; (4)
gerrymandering of House congressional districts; (5) endless
filibusters in the U.S. Senate; (6) holds on executive appointees in
the Senate; (7) dwindling social interaction between senators of
opposing parties and the reduced cooperation that comes with it; (9)
a caucus system that promotes party unity at the expense of
bipartisan consensus.  It seems like an awfully big, deep whole to
dig out of.  And, what makes it worse is that partisan and party
gains are the predominant driving factor in the U.S. Congress.

Much of what contributes to the impossibility of a fix is due to the
extreme bifurcation of our political parties and especially the
rightward shift of the Republican party.  The lack of willingness to
compromise prevents solutions which benefit the rich, who might have
had to pay a bit more for those solutions.  One symptom of this
process are Republican primary elections, which have become
effectively heresy trials that punish those who are seen as not
ideologically pure.

The middle (moderates) has disappeared.  That blocks action and
ensures gridlock.  Even when a compromise is enacted, Congress does
not move on to other work; it comes back and tries to undo what an
opposing party has enacted.  We are seeing this now in the
Republican Right's attempt to roll back the Affordable Care Act
(ObamaCare).

The New Right has replaced the Old Right: no consensus politics; no
moderate positions; no compromises; no tolerance for moderation and
cooperation by party members; purging of moderates (Rinos); and
driven by the Tea Party push for lower taxes and smaller government.

One of the key enablers of this changed state of our politics was
the civil rights legislation of the 1960's.  That was what caused to
formerly Democratic South to become Republican.  Now the U.S.
political system is controlled inordinately by the South and by
thinly populated states in the West and Southwest.

Increased polarization leads to inaction and a lack of productivity
in Congress, which causes more economic inequality.  So, for some,
for a few, the system works.  It delivers the desired results,
specifically the results desired by the rich.  And, that's a take
away point: if you want to produce another Gilded Age in which the
rich win, then you engage in ideological partisanship.  Extreme
partisan, non-cooperative politics is not the unfortunate
bi-product; it's the driving force for the desired results, the
results desired by the rich who pay the campaign financing bills.

02/20/2013

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