The Case for Socialism

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Posted by Bob Lord

I truly believe that by drilling down just a little into the job numbers and put them next to the assault on unions and the increasing concentration of wealth and income in the top one percent, there’s a strong case to be made that we should be embracing socialism instead of demonizing it.

Start with the job numbers. We were fairly close to what is considered full employment during most of Bush’s presidency. Then, in 2008 – 2009, we hemorrhaged jobs. Since then, we’ve had a fairly anemic recovery and seem to be stuck somewhere in the 8% unemployment range, with many more under-employed or having dropped out of the work force entirely. But that’s an entirely distorted picture of the economy’s ability to produce jobs over that same period. From 2001 through 2006, the construction industry was producing a glut of homes and office and retail space. The effect of the construction industry’s hyperactivity during that period, essentially, was to borrow jobs from the future. Think about it. If the construction industry had not over built during the 2001 – 2006 timeframe, there would have been fewer jobs, not only in construction, but in related industries (mortgage banking and finance, to name a few). Quite obviously, there also would not have been a huge loss of jobs in 2008 – 2009. And, without a glut of homes and office and retail space, there would have been more construction activity over the last few years and, hence, more jobs. But we still wouldn’t be at full employment, or even close.

If you adjust for the artificial shifting of today’s jobs to an earlier period caused by the construction bubble, the jobs picture in America would have been far more stable, but would show that for a full decade we have not been producing enough jobs to employ the entire workforce. That’s not an accident and it’s the fault of neither the Democrats nor the Republicans. The hard reality is that technology and mechanization are fantastic for productivity, but they costs jobs — lots of them. Just a few decades ago, a law office needed almost one secretary per attorney. Today, law offices do just fine with one secretary for every three attorneys, and plenty of attorneys (especially younger ones), don’t need a secretary at all. That’s what happens when you replace typewriters with desktop computers and steno pads with dictation equipment and voice recognition software, and regular mail with email. The global economy also is a reality. Yes, our trade and tax laws suck and, yes, we wouldn’t have lost as many jobs to outsourcing if those laws were better conceived, but we still would have lost jobs and the availability of vastly cheaper labor in other parts of the world will continue to cost us jobs.

The new normal really is that it will be more and more difficult for our economy, as currently structured, to produce jobs for all who want them. Not long ago, Tom Friedman noted in one of his columns a new device in the restaurant industry that ultimately could eliminate most of the jobs currently held by waiters and waitresses. Technology will be used in the near future to enable a highly talented professor to teach tens of thousands of students, instead of just a few hundred at a brick and mortar institution. That may improve education and also decrease the cost of a college degree, but it also will cost a lot of slightly less talented professors their jobs. Changes like these will swamp our ability to create new jobs.

This explains why real wages have been flat or falling for most Americans for a decade. Wages are subject to the laws of supply and demand. If the number or workers increases and the number of jobs decreases, the pressure on wages is downward. Now, consider the impact of the assault on organized labor. The organization of workers essentially is a mechanism to blunt the effect that the laws of supply and demand otherwise would have on wages. Without unions, workers compete more fiercely for jobs by accepting lower wages. Also, the bargaining power of workers is dramatically worse without organization. The decimation of organized labor exaggerates the downward pressure on wages caused by the changed jobs picture over the last decade. So, the decline in wages is the natural outgrowth of economic forces and the assault on labor.

While workers have been losing jobs and losing wages, however, our national income has increased. Productivity and cheap foreign labor are not good for jobs, but they’re great for profits, profits that flow to upper level management and shareholders, otherwise known as the top one percent. So we have more income overall as a country, yet wage earners are making less. The math here isn’t hard. Those at the top have done phenomenally well over the last decade, while everyone else has suffered.

So, do the same forces that explain the change in the jobs picture and the decrease in wages also explain the dramatic increase in the concentration of wealth and income in the top one percent? Only partially. Even without those forces, we need strongly progressive tax laws and well conceived regulation of businesses in order to prevent undue concentration of wealth and income at the top. Of course, over the past decade, we’ve had the opposite. The tax burden on the top has been reduced to the point where many wealthy individuals pay taxes at a lower effective rate than ordinary Americans. At the same time, the deregulation of the finance industry and others effectively allowed ultra wealthy bankers to fleece the public out of the wealth they thought they had in their homes and 401(k) accounts.

Think of it this way. The board game Monopoly channels unfettered capitalism. Wages are represented by the $200 a player gets each time he completes a lap around the board. Capital is of course the money he starts with, plus all the properties he is able to acquire as the game proceeds. The amounts a player pays for stopping on various squares represents the cost of living. Over the course of the game, the value of labor relative to the cost of living declines rapidly. The wages for each lap stay the same, but the cost of completing the lap increase, especially if you land on Boardwalk or Park Place a few times. And capital, of course, is the ultimate winner. In the end, the concentration of wealth at the top is one hundred percent. One player owns everything and all the other players are broke.

In Monopoly, you could at least slow the concentration of wealth in the winning player if each time a rent was paid, the recipient had to pay 50% of it out in equal shares to all the players and each time that player completed a lap around the board he had to pay property tax. The Community Chest and Chance cards attempt to do this, but the rate of tax they impose is akin to the rates that would apply in Mitt Romney’s dream world.

Over the last decade the American economy has become more and more a game of Monopoly. Those with some form of capital (money, property, high intelligence, unusual athletic ability or exceptional looks, etc.) have done increasingly well. The rest of us all have suffered.

All of this can be summed up in one sentence: In the constant struggle between capital and labor, capital has gained a huge advantage that it is unlikely to lose without real changes in policy. On this front, virtually all of today’s politicians are delusional (or, more likely, bought off) in that they exalt capitalism and the so-called market economy. No economy is purely capitalist and no economy is purely socialist. From a policy perspective, when the playing field tilts in favor of labor, capitalist policy makes sense and, when the playing field tilts in favor of capitalism, socialism makes sense.

Right now, because of the relative positions of capital and labor, we need a healthy dose of socialist policy. We need policies that promote the organization of labor, perhaps even mandate it. We need a far more progressive tax code, that will, perish the thought, redistribute wealth and income away from the top. And doing away with the Bush tax cuts won‘t be enough. We need top income tax rates above 50% for those making over a million dollars per year. And the lower income tax rate on capital gains and dividends needs to go. If anything, the income Paris Hilton receives from sitting on her butt waiting for the dividend checks to roll in should be taxed at a higher rate than the income of a steelworker or a secretary. We need federal, state and local governments to create jobs through public works and infrastructure projects and the hiring of sorely needed teachers. We need a truly socialist health care system in which the government guarantees health care for all Americans. Lastly, and most importantly, we need to expand, not contract, the social safety net. It’s flat out ludicrous to cast blame on a worker who has not been able to find employment. If that worker found employment, another worker would be out of a job. So it makes no sense to discontinue unemployment benefits. Instead, we should be encouraging certain workers to leave the workforce by enhancing social security benefits, not reducing them. If we reduce the retirement age to 60, or even 55, but tax the crap out of the benefits if a recipient continues to work, we encourage soon to be geezers to hang it up earlier in life, which frees up jobs for 20 somethings who desperately need to start their careers. Similarly, if we make a quality college education available for any student who has the mind and desire to learn, we free up the jobs those students otherwise would take if the cost of college precludes them from attending. There are countless other policies to "spread the wealth" that ought to be on the table.

There was a time in this country when socialism wasn't demonized. We even had a Socialist Party. It wouldn't be a bad thing if the Socialist Party rose again.

10 COMMENTS

  1. Excellent, Neil! Thanks so much for posting that here. Win/win all the way around. You’re absolutely correct…a word that labels and seeks to divide, rather than work together towards a common goal and solution to a problem. Thanks again!

  2. Hey Bob,
    This is great. I think it might be good to expand on in the future about what works in different parts of the world. There are great examples of social enterprises that get poor people into meaningful work in the UK and elsewhere. Other examples are charities that have for-profit enterprises, with all profits going back into services provided to a range of communities and not as profit into the pockets of individuals. We have great examples here in New Zealand. Grass roots initiatives can work wonders and give work to marginalized people. I worked for a mental health charitable trust that had workshops for furniture making and bone carving and jewelry making. People in recovery from their own lived experience of mental health problems got trained in the skills to manage these projects themselves. This has resulted in several businesses being started that have turned people’s lives around. So you are right, you don’t have to have one political model. You can have several working in tandem at the same time.

    A great local initiative about an hour north of Auckland came out of a group of people in a small run down town, re-teaching Maori traditional crafts such as carving and weaving. With a small grant they began to rebuild their community, by going round people’s homes and getting them involved through direct relationship, rather than hoping they would turn up at a public meeting. Through this they set up a trust and rebuilt a Marea (traditional meeting place), regenerated the local land with native planting, cleaned up the local river and have crated a conference and visitors centre. Most of this they achieved by finding people with old skills and new ones and getting the whole community time and energy to make it work. What is really impressive is that the Trust they created pays all staff a flat rate, so both the cleaner and the CEO earn exactly the same. This has been a big part in maintaining community trust and over a ten year period has contributed to a reduction in crime, youth unemployment and general well being of the town. They have not stopped growing either and now go to other depressed communities to provide training in how they achieved success, not expecting a repeat, but helping others explore what would work in their local environment, so there is no one size fits all. Socialism possibly, but what’s in a label. A rose by any other name would smell as sweet.

    We just need to get people to understand that they can change things for a common good, which also helps themselves at the same time, be it workers cooperatives, charitable trusts or incorporated societies. There are many alternatives, which can work well alongside making profit, but just not at the cost of the lives of others. Things don’t have to stay the same.

    Keep going. Don’t let any critics on the blog get you down.
    Neil

  3. I’m guess THIS is better for Mr. Ash

    http://mittromney2012potus.blogspot.com/2012/03/news-buzzed-this-week-with-news-of-mitt.html

    Romney and his Chinese Investments
    The news buzzed this week with reports of Mitt Romney having investments in Romney’s trust with Huawei, a Chinese company. The specific articles running were about Mitt making money off of Huawei. Huawei is involved in making spy cameras. Although some journalist are poo-dooing Romney’s investments, claiming Romney did not know what is in his blind trust; for some reason the New York Times and the Obama administration were able to learn. Romney has ownership in a company and profits Romney is making in helping China spy on dissidents in China, set off a bit of a buzz.

    All Gov.( a website) reported, Romney is making money also spying on Americans. Bain purchased Uniview last year. “Uniview Technologies, a Chinese company owned by Bain, has provided surveillance cameras to the government for its Safe Cities program, which allows officials to monitor university campuses, hospitals, mosques and movie theaters.”

    However –

    Romney’s connections to Huawei are not new. Republican Duncan Hunter, during the 2008 GOP run off for president, brings up Romney’s China connection! Hunter further states Romney’s China connection makes Romney unfit for office.

  4. By the way, interesting that you bring up Europe, considering that the Republican plan for the economy of severe austerity measures, would mirror Europe completely. Last I checked, they were really having a very hard time compared to the US.So I suspect that it is the REPUBLICANS that would like to actually emulate Europe and not the Democrats. Was that little fact lost on you? Sure@ Let’s double down on the austerity measures that threw Europe into an economic tailspin! Seriously??? You guys have no business having ANY say in govt.

  5. Extremist you say? What was extreme about that? You say the word “European” as if it’s a dirty word. “Enslave the world and create destruction”? Please explain that one too. Seems a little over dramatic. The fact of the matter is, we have a combination of capitalism and socialism in our govt, and that’s just fine. You seem to either lack the knowledge of this, or just prefer the easier RW talking points. So much easier to scare people that don’t understand that not all socialism is bad,in fact they see it everyday. Use it everyday, and have no complaints. Much easier to demonize a word for political gain than to be honest. With yourself, or the people of AZ.Social Security, Medicare, US Postal Service, the VA.All socialistic programs. Thank goodness for those. Free enterprise and capitalism are good as well. With oversight and common sense regulations for both. We have no “pure” anything here, and for you to pretend that we do, while demonizing the other, is wrong.

  6. Yes, fie on all European ideas: democracy, republican government, the secular state, science, reason. Since when has any of that done the world any good?

    And socialism? Never done us any damn good at all. Social Security, Medicare, FEMA, fire departments, police services, roads, damns, airports, public schools and universities – it’s all socialist shit. We ought to privatize all of it!

  7. A stunningly moronic and twisted thesis from an extremist viewpoint.

    Where do you folks come up with these incredibly european ideas that have never accomplished anything except enslave the world and create destruction?

    I have a suggestion you might want to consider…….if you really think this is such a great idea call the White House and suggest that POTUS do a new You Tube espousing your brilliant campaign strategy..

  8. Bob, I think you need to watch this, and then you’ll understand why we are where we are. The fact that these men gathered together and purposefully plotted the destruction of this economy for the sole purpose of blaming the President and getting back power, is nothing short of treason.It includes our very own Jon Kyl. Try to wrap your head around this.



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