A Blueprint for 21st Century Populism

I have just finished reading "America Beyond Capitalism: Reclaiming Our Wealth, Our Liberty and Our Democracy" by Gar Alperovitz. Don't let the title scare you. Anyone looking for a Marxist diatribe about the inherent evils of market economies will be disappointed by this book recently released in paperback by Wiley Publishers. Instead you will find a thoughtful book that presents realistic ideas about how prosperity can be expanded in our nation. "America Beyond Capitalism" is a good starting point for developing a "21st Century Populism" to effectively address growing economic inequalities and gain control over the rapidly expanding power of big business.

Alperovitz is a man of the Left on economic and social matters but he pulls ideas from across the ideological spectrum about how the American standard of living can be improved. The author pulls no punches in pointing out how tax cuts for the wealthy, deregulation, the weakening of collective bargaining protections and globalization have brought about economic stagnation for many workers, but looks for solutions rather just dwelling on the injustices resulting from these laissez faire policies.

Taking a realistic approach, Alperovitz expresses doubt that organized labor can regain its former political strength as a balance to corporate power and notes the virtual poltical impossibility of raising taxes on upper middle class suburbanites. Any successful attempt at rolling back tax cuts is likely to be directed at the upper one to five percent of the population. The dramatic growth of corporate power is illustrated by the fact that corporate taxes accounted for 35.4 percent of all federal tax receipts in 1945 and had fallen to 7.4 percent of federal receipts by 2003.

In his book, Alperovitz suggests that means of generating public revenue other than through redstribution of income need to be explored. One suggestion is to create a Public Trust which would oversee the investment of stock in the same manner as state and local public pension authorities. The proceeds from the Public Trust could flow to the federal treasury, states and even individuals. Alperovitz proposes a "Pluralistic Commonwealth" to create "new public and semi-public wealth building institutions" expanding prosperity and which "structrually tethers large scale firms at the top by lodging stock ownership in the Public Trust accountable to and open to scrutiny by the public."

Another big idea presented in the book is a system of Individual Development Accounts (IDA's). The IDA's would enable government to "directly match the savings of the poor - thus doubling their efforts and allowing low income individuals to benefit from the ownership of capital." Alperovitz describes a proposal by Yale economist John Roemer to provide every adult with "voucher-like coupons" to be used for the purchase of stock through a "new form of mutual fund."

Alperovitz makes a very insightful observation on page 73 of his book, "Neither tradional socialism nor traditional capitalism deals well with the power problems presented by large-scale enterprise. Significant economic actors in the socialist state are commonly unaccountable either to market forces or to the public, they are power systems within a power system. The modern for-profit corporation is for the most part unaccountable to the public - and contrary to traditonal theory, in most cases unaccountable to shareholders as well. As the Enron and other scandals have shown managers and top executives run the system dominating boards and annual meetings alike. Rarely are successful challenges to their power successful, even by major shareholders."

Increased tax incentives to encourage the formation of more employee owned corporations is one way that American prosperity can be expanded. Alperovitz notes that pay in employee owned firms is 12 percent higher than in non-employee owned companies. Employees of such firms earn far more value in stocks than workers with 401(k) plans which some bitterly joke that given dismal performance have become 201(k) and 101(k) plans.

Alperovitz praises neighborhood community development organizations (CDC's) for their social service projects and business development functions within economically deprived areas. CDC's are under local community control and would play a critical role in service delivery and economic development in the "Pluralistic Commonwealth." The emphasis on such social entrepreneurship has already been embraced by some American conservatives as well as even some European social democrats. In fact, some European social democracies long used voluntary organizations for service delivery rather than expanding government. Anthony Giddens, writing in "The Third Way: The Renewal of Social Democracy" (Polity 1998) indicated that in Germany, Holland, Belgium and Austria about half the social services are provided by private groups. Certain functions like operating day care centers are almost universally left in the hands of private non-profit organizations.

Reinventing government would also be a focus of the "Pluralistic Commonwealth." Alpervoitz observes the "threat of privatization" can sometimes to improve government performance. The author tells of the experience of former Republican Indianapolis Mayor Stephen Goldsmith who won election on a platform of vigorous privatization of public services. After winning election, Alperovitz writes: "Goldstein became convinced that 'competition' - not privatization per se provided the key to improving city services and reducing costs. Public employees were allowed to bid on city contracts, and to redesign their offices and operations in the process. Public employees won the majority of the contracts put out to bid, with estimated savings of $135 million in the program's first three years." Alpervovitz notes that city owned power companies in several major cities provide electric service at a cost of 11 percent less than investor-owned power companies. A municipally owned utility in Glasgow,KY offers high speed internet access for less than private competitors and Cable TV service with 80 digital channels for $15.95 per month.

Alperovitz describes the coming insolvency of our Social Security system but notes that a collapse is not inevitable. The author presents several possible solutions to the crisis which include raising the earnings limit, a 1 percent net worth tax and allocating a portion of Social Security contributions to an equity-invested fund that would operate in a similar fashion to the Federal Thrift Savings Plan.

Health care reform is likely to become viable again. While insurance companies were successful in blocking the last serious attempt to expand access to health care for all Americans, public opinion supports such a change and many corporations now favor some form of national health insurance.

Displaying something of a libertarian streak, Alperovitz suggests the potential for greater automony at the state level and the possible transfer of many powers of the federal government to the states or some form of regional government structures. Some of this appears rather unrealistic at the present time but may come into existence in the future especially given the growing cultural and ethnic divisions in our nation. The author points out that large states like California, Texas and California are increasingly diverse and have much larger populations and economies than many nations.

At times, "America Beyond Capitalism" seems like a confused jumble of sometimes conflicting ideas about how properity and personal liberty can be expanded in America, but Alperovitz at least does present a number of creative solutions for the growing income inequality in our nation.

I disagree with Alperovitz's positions on some matters such as the likely impact of illegal immigration in the U.S. The right kind of immigration could help to solve the Social Security shortfall, however, massive numbers of unskilled newcomers are likley to make our economic and social problems worse. Like many progressives, Alperovitz is convinced that a large influx of poor and low skilled individuals from south of the border will create a political environment more inclined toward activist government and challenging corporate power. This seems unlikely as a larger class of impoverished Americans will make social programs more expensive and therefore less likely to be supported by the surburban upper middle class fearful of tax increases and certainly the influential wealthy. Furthermore, many of these new immigrants may not be inclined to vote or end up voting against their economic interests just as significant numbers of working class and native born Americans do.

"America Beyond Capitalism" is well worth reading. The book presents ideas that will be of interest to a wide range of Democrats. There are some excellent ideas presented that populist, progressive, centrist-New Democrat and and libertarian Democrats can agree on.

http://tinyurl.com/o3ab3

Take This Job and Ship It

Here's a review of Senator Byron Dorgan's new book titled "Take This Job and Ship It: How Corporate Greed and Brain Dead Politics are Selling Out America" from St. Martin's Press. This is an important book that deserves to become a best seller.

As big companies move their jobs to China, sell their products in America, and run their profits through the Cayman Islands to avoid taxes, they undermine American workers and threaten our future.

For some commentators, the world may seem to be “flat,” but Senator Byron L. Dorgan knows better. With both barrels blazing, the senator from North Dakota contends in this forceful and provocative book that while exporting jobs may be good for the giant corporations, it is a disaster for America as a whole.

Trade can’t be “free” when our small businesses and working people are expected to compete with exploited workers and slave labor in third-world nations that care little about the conditions in their factories and not at all about the pollution they generate.

Our trade deficit now increases by $2 billion a day, but pharmaceutical companies have such influence in Washington that Medicare, by current law, is not allowed to negotiate lower drug prices. We import oil on an ever-increasing scale, putting ourselves into debt with the Saudis, the Kuwaitis, and other Middle Eastern nations; with their windfall profits, they continue to buy American assets. China’s booming economy and abundance of cheap labor is threatening our economic survival as America’s manufacturing base is dismantled.

We have mortgaged our fortunes, our principles, and our way of life.

With biting wit and an unerring moral compass, Dorgan weaves colorful stories about the dancing grapes from Fruit of the Loom underwear, Fig Newton’s escape to Mexico, the disappearance of the flag decal from Huffy bicycles, and how a trade agreement sent exotic dancers to Canada. He exposes the absurdity of our global-trade policies, and isn’t afraid to name names.

Dorgan pulls no punches and, most important, he offers a refreshing, bold strategy for putting our country back on track. America can once again be a booming exporter as well as a good trading partner with the whole world, but to mindlessly cheer on the loss of more than 3 million jobs (and that’s only the beginning) is just plain folly. In the long run, the United States cannot help the rest of the world by impoverishing its own people and bankrupting its own economy. With a little courage and some original thinking, the negative trade balance can be slowed, even stopped and reversed.

Senator Dorgan’s is a message that must be heard – before it is too late.

* THE REAL CLASS WARFARE

Apologists for corporate greed often accuse economic populists of engaging "class warfare." Well, the real class warfare is being waged by overpaid CEO's who give receive additional perks while insisting that employee benfits and pensions must be reduced or eliminated.

Froma Harrop, one of my favorite syndicated columnists, called attention to this hypocrisy in Wednesday's Seattle Times http://tinyurl.com/o5xhl

"It's not news that American executives have put ordinary workers' benefits on a diet while they go for a fourth helping. What makes this redistribution of corporate wealth special is its brazen and unblushing quality. We are not talking here about some stock option deal where the top guys are rewarded for increasing shareholder value. In this case, the money gushing into the executive suite is simply being siphoned through holes drilled in workers' paychecks." An example, courtesy of The Wall Street Journal:

"General Motors has long complained that its "legacy costs" have made the automaker dangerously uncompetitive. By "legacy costs" it means the health benefits and pensions that it promised its workers and retirees. In an effort to ease those "burdens," GM recently announced it would end pensions for 42,000 of its salaried employees."

"But guess what The Journal discovered? It found that the fund for those middle-class pensions was actually bulging with $9 billion more than was needed to honor them. The real problem, it turns out, was GM's executive pensions, which management had been supersizing even as it demanded cuts from the lower-downs. GM's executive-pension obligations, we learn, are $1.4 billion."

"General Motors is not the only company to have built up extravagant pension deals for the privileged few. Executive-pension liabilities have hit $3.5 billion at General Electric, $1.8 billion at AT&T, and $1.3 billion at ExxonMobil and at IBM. "Sometimes a company's obligation for a single executive's pension approaches $100 million," The Journal reports.

"Cleary, the workers whose pension plans have been frozen aren't the only ones losing out. These unfunded executive pensions suck off earnings that are supposed to be going to the stockholders."

Corporate executive officer benefits are clearly out of control. Companies should not be allowed to escape their pension obligations and even file for bankruptcy under Chapter 11 while continuing to provide outlandish compensation packages to CEO's.

* THOUGHTS ON THE CONNECTICUT SENATE RACE

Despite Ned Lamont's narrow victory in last Tuesday's primary, the voters of Connecticut still have a race between two Democrats for Senator as the Republican nominee is not expected to be a significant factor. Joe Lieberman, now running as Independent Democrat, is not my idea of a perfect Senator.

While I did initially support U.S. intervention in Iraq, I now recognize that was a mistake. I also agree that Lieberman is out of touch with reality on Iraq and made himself vulnerable for a primary defeat by failing to criticize the Bush Administration's handling of the war. In my view, Lieberman has voted wrong on a number of issues including trade matters and some of the controversial social issues like abortion rights and gun control.

I do respect Lieberman for his willingness to take unpopular stands and that he seems to be a gracious man with a strong personal faith. Lieberman has been willing to criticize the entertainment industry for degrading our culture.

Far more important than saving Joe Lieberman's political career is stopping the Moveonner Left who want to have total control over the Democratic Party. If these people win control over the party, moderates and conservatives are eventually going to crushed although a few might be tolerated now.

Ned Lamont may not be radical but he is being backed by a dangerous faction in the party that will dissenting views if they are allowed to gain control of the party. Lamont will be obligated to this faction if elected. Any Senator from Connecticut will be relatively liberal but this struggle within the party is not so much about philosphy as about power and the tolerance for differing views within the Democratic Party.

Furthermore, Ned Lamont is a millionaire elitist who would have been a Rockefeller Republican thirty years ago. While Lieberman does not really fit the bill for a populist Democrat, Lamont will definitely take the party further in the direction of being a group of ivory tower social liberals. If re-elected, Lieberman will be a vote for Democratic Senate control as he will remain in the Dem caucus.