NOBULL: Right-Wing Lies About Inequality
Posted in Daily
FOCUS: Robert Reich | The Four Biggest Right-Wing Lies About Inequality
Robert Reich, Robert Reich’s Blog
Reich writes: "Even though French economist Thomas Piketty has made an air-tight case that we’re heading toward levels of inequality not seen since the days of the nineteenth-century robber barons, right-wing conservatives haven’t stopped lying about what’s happening and what to do about it."
I think that he forgot an important point: Some of the rich are buying the system and all of the rules don’t apply to them because they can buy their way out of any fraud they wish to engage in. All his points point toward this fact that is becoming more and more apparent to the average American.
For why there’s inequality, see Wealth Happens http://www.exponentialimprovement.com/cms/wealthhappens.shtml
It’s seldom the smartest or most efficient who win at the game, Monopoly. It’s that those who first get ahead tend to get even further ahead and those who first get behind tend to get even further behind.
The HBR article, “Wealth Happens,” describes from a complexity theory perspective that disparities in wealth happen naturally, even when everyone starts out with equal ability and resources. Extremes in the distribution of wealth are greater when capital gains taxes are lower & when sales taxes are higher.
The dynamic is “path dependence” in system dynamics, the result of two interacting positive feedback loops.
Right-wing “conservative” policies put this dynamic on steroids, making the game rigged to drive millions into poverty. Labor should even not be considered a “free market” commodity because people should not be considered to be like widgets, even if supply & demand were not rigged.
Bob, it seems to me it can be partly that but what I see and my own experience is that wealth buys you the rules so that you don’t have to follow them.
Monopoles extract wealth by adjusting the rules and not following them. They also do it by exerting their market power. If you think about your public utilities, you can get the point. In the robber baron days monopolies would extract all of what is called the consumer welfare. These are called natural monopolies because the efficiencies of service. If you think of electric service, think of all how using one electrical line to service all residence is so much more efficient that having 6 companies competing with all having to put up their own utility poles and electrical lines to make a competitive market. Thus, electrical service is a natural monopoly.
Our country has dealt with these natural monopolies by making them heavily regulated as to their abuse of market power or public utilities where the capitalist motive of profit is removed.
In the days of the robber barons railroads, which were the primary source of movement, were using their power to maximize profit by charging different people or classes of people or companies different rates. Some railroads even gave discounts to companies who made deals with them. This allowed some companies to gain competitive advantage with respect to their counter parts who did not have these sweet heart deals. This problem allowed those with the most money to make these deals and capture large parts of the economy. In the case of oil and Standard Oil, the great octopus monopoly of the day, to make new finds of oil pay so much more in shipping of that new oil find via rail road so that the production of oil and its delivery became captured by Standard Oil. This example was why we have many of the anti trust laws and regulations regarding natural monopolies.
Imagine if we didn’t have these laws and regulations and an electrical utility could charge a high class neighborhood more money for their electricity than a poorer neighborhood next to them. Any time a new big house is built they could charge those people more for electricity because they can pay those extra fees.
I agree with you that the right wing is now on steroids and hiding monopoly and market abuses behind “being for” business. They are simply on the take. They ignore our recent history and the accumulation of wealth and power by the wealthy and powerful. They either have no sense of history or are the political henchman of the rich who would wish away all of the rules that protect the economy from market abuses by large and powerful. Our federal judges have been put on the bench to the same ends, it seems.
Robert Reich is correct to use his economic intelligence to bring these economic abuses to light. He is also right to say that it doesn’t have to be this way and as a society as a whole, we can reject the ways of the Robber Barons and unbridled greed. I personally think we need to go further and hold them accountable for the damages they are creating in the economy because we have the the hindsight of history and laws on the books to prevent many of the current frauds. They just are not being enforced. It is enriching the rich and enslaving the not so rich.