Does economic inequality lead to political polarization or is it the other way around? Krugman believTop notch analysis from a brilliant commentator.
Does economic inequality lead to political polarization or is it the other way around? Krugman believes that political change ultimately forms economic reality more than the reverse.
He says that the middle class of the post war era was a creation of government policy and not a naturally event arising from economic rules. He calls the postwar period, in which income extremities were both pushed towards the middle The Great Compression. He looks in some detail at how the south remained Democratic even in the face of social welfare programs. It turns out that those programs helped the south and the taxes to support those programs fell more heavily on the north. The limiting factor was racism, however. When faced with programs that would have removed race barriers the bigots of the south balked. One example was Truman’s attempt to institute a national health insurance plan. It would have meant that hospitals had to offer the same care to all regardless of race.
P 7 Over the course of the 1970s, radicals of the right determined to roll back the achievements of the New Deal took over the Republican Party, opening a partisan gap with the Democrats, who became the true conservatives, defenders of the long-standing institutions of equality. The empowerment of the hard right emboldened business to launch an all-out attack on the union movement, drastically reducing workers’ bargaining power; freed business executives fom the political and social constraints that had previously placed limits on runaway executive paychecks; sharply reduced tax rates on high incomes; and in a variety of other ways promoted inequality.
P 61 – Quoting FDR “We have always known that heedless self-interest was bad morals; now we know that it is bad economics.” ...more
This is a major work. Diamond looks in detail at the factors at play in the demise of civilizations in human history, using a wide range of examples. This is a major work. Diamond looks in detail at the factors at play in the demise of civilizations in human history, using a wide range of examples. He offers a framework in which to structure the analysis and looks in great detail at possible (and in many cases certain) reasons why various societies collapsed. He is not a one-note analyst. All problems do not fit the same mold. There is considerable nuance and common sense brought to bear on this examination. Foolishness plays a part, greed, corruption. But just as frequently, the actors behave rationally. Maybe they were unaware or could not possibly be aware of the larger implications of their actions. Maybe the land in which they lived was ill-suited to large numbers of humans. Maybe changes in climate made what seemed a reasonable place a death trap. Clearly an analysis of why societies failed in the past, with particular attention to environmental issues, has direct relevance to our world today. For example, Polynesian islands that were dependant on resources from other islands collapsed when their import supply dried up. That has relevance to oil-dependant first world nations today, for example. Diamond goes out of his way to make a case that business is business and they are not in the business of performing charity or taking responsibility for the common weal. He does point out that some businesses have been instrumental in forcing improvements in producers. He cited Home Depot and BP among others, although I expect he might have second thoughts about the latter's net impact.
I found the book to be extremely eye-opening and informative. It was a long, slow read, but well worth the effort. It makes my short list of must read for anyone seriously interested in current affairs. ...more
This was a very illuminating work about how chaotic situations are used, and sometimes created, as cover for the imposition of drastic economic and po This was a very illuminating work about how chaotic situations are used, and sometimes created, as cover for the imposition of drastic economic and political reorganization in vulnerable economies. The end product of these actions is a so-called free market model as advocated by the Chicago School of Milton Friedman and his acolytes. Examples used include Chile, China, Argentina, Bolivia, South Africa, Russia, among others. The technique is for western financial powers to swoop in during a time of financial crisis and refuse to lend a struggling nation any money until that nation agrees to a radical reworking of its economy. This reworking is done in a shock, with many changes instituted all at once, with little or no warning. These changes, as they are draconian toward the lower classes, usually need to be accompanied by severe political repression in order to enforce the transition. What we see here is the mechanism of a growing form of corporatist colonialism.
Klein parallels her examination of the stresses endured by many national economies with a look at actual, literal, personal shock treatment. In the 1950s a researcher named Ewan Cameron did research on his theory that instead of Freudian therapy a more effective method of treating mental illness was to erase the patient’s personality using electric shocks. Then the blank page would be receptive to reconstruction by the good doctor. The shocks caused amnesia and extreme regression. Cameron devised a new tool, one that applied six shocks at once, and even used a wide range of drugs to disorient and wipe clean as much of the patient’s personality as possible. Once the subject was reduced to a vegetative state, Cameron played them tapes dozens, maybe hundreds of times over. The CIA took note and launched a program of its own.
She posits a parallel between treatments that serve to erase personality with the economic and political shocks that struggling nations are forced to endure, shocks that are part and parcel of the move from a developmentalist economy, one that seeks local control and self-sufficiency, to a globalist economy, one in which foreign investment in and ownership of local enterprise is encouraged.
While I found that at times Klein extended her discourse beyond the reach of her material, her analysis of the subject matter is compelling, her linkage of different forms of shock (personal, political, economic) illuminating, and the applicability of her work to the current economic disruptions frightening. Despite its subject matter, this a compelling, and relatively fast read. It should be mandatory reading for anyone concerned with politics, economics, world affairs or current events.
=============================EXTRA STUFF
August 4, 2011 - the following article has particular relevance not only for the international implementation of TSD, but to its application within the USA. It is an interview with Dr. Michael Hudson, a guy who has been ahead of the curve for a long time on the roots of current economic atrocities.
June 18, 2012 - Joe Nocera's NY Times column on how ALEC-based programs are gutting democracy in Rhode Island ...more
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