KAMISCHKE: Capitalism and democracy have different goals

Let me start by saying that capitalism, as an engine for growth, has no rivals.
May 2, 2014

 

Communism, by and large, has collapsed with Russia and China migrating to Western-style economies. Other economic forms, such as bartering and feudalism, have long been abandoned.

Yes, capitalism stands alone as winner and champion.

However, the same forces that make capitalism work so well also concentrate wealth into the hands of a few. As the rich receive higher percentages of the economic wealth, the lower economic classes are left with a shrinking piece of the pie.

No matter your politics, our cultural narrative says that hard work and smart choices should lead to higher standards of living. Yet, since the 1970s, merit-based success has become ever more difficult. We are experiencing an economy where the wealthy prosper, but wages and employment rates are stagnant. Wealth is not “trickling down.”

If you've ever played Monopoly, you know that the game ends with one player owning everything. We even know how it happens: one player, either because of shrewd decisions or luck, gains the advantage, and then watch out. Up go the houses and hotels; up go the rents; down go the cash reserves of the other players and their ability to improve their own properties. Soon, the wealthiest player — let's call him Rich — has a minefield of red hotels waiting to collect maximum rents from those unlucky enough to land on them. Inevitably, capital in the form of property is what matters — and, if all you have are wages ($200 from passing Go), you will be soon be watching from the sidelines.

It could be worse. Imagine playing the hypothetical game, Lobby Monopoly, where Rich not only has growing economic advantages, but he is permitted to make rule changes. By making a $10,000 donation (a fee only Rich can afford) to the Support Your Politician fund, Rich receives a special card that entitles him to write one new rule.

Perhaps Rich's rule is to double his rents. Did I say double? Triple! Quadruple! Maybe he eliminates the $200 payment for passing Go, calling it just another government handout. Perhaps his rule allows him to transfer his wealth to some future game, a kind of inheritance.

You can count on one thing: any rule change will be to Rich's advantage.

By now, my Monopoly analogy must be pretty transparent. Monopoly is a simplistic version of the system we call capitalism, and while not everything translates perfectly, it should spark questions of fairness and justice for the real-life counterparts.

Since the Industrial Age began, democratic governments have understood that to prevent a divided society of plutocrats and serfs, some part of the highest incomes must be redistributed. That's why we have graduated income taxes, inheritance taxes, rent control, social programs, minimum wage rules, etc.

A large middle class and an era of prosperity were created when the rich were taxed far more than they are today. From 1946 until 1963, the maximum federal income tax rate was about 91 percent. Today, it’s 39.6 percent.

In recent decades, however, U.S. capitalists have worked hard to reverse redistributive policies by lobbying Congress and proposing rule changes: Reduce the inheritance tax. Change to a flat income tax. Reduce food subsidies and unemployment support. Keep the minimum wage rate below the poverty line. Make it difficult to form unions. Tax investment income less than earned income. Allow income to go offshore where it's untaxed or to trust funds for the next generation. Relax the rules on mergers and monopolies. Allow Wall Street to earn billions while putting the country in jeopardy. Make the word "tax" a political nonstarter. Increase the legal influence of money in elections.

According to the Federal Reserve, the top 10 percent own 72 percent of the wealth, and the bottom 50 percent have just 2 percent. At what point have we stopped rewarding wealthy entities for their creativity and risk-taking and we are just ceding to those with economic power unearned bonuses?

Those who want unfettered capitalism are naive. I suspect that if I asked these fundamentalists to describe a condition where capitalism had gone too far, they would come up blank — and that's the rub. No system is perfect. Capitalism’s many virtues seem to blind its most ardent supporters to any negative effects. Their simple model of capitalism is just too simple.

Capitalism is not the same as democracy, nor is it somehow self-regulating and consistent with the values important to society as a whole — values like equality of opportunity and fairness. Those who think otherwise must also believe that greed and self-interest will inevitably lead to the betterment of everyone, although that is contrary to everything we know about living in a society. This discrepancy alone should have been a big clue that something is amiss in their thinking.

— By Richard Kamischke, Tribune community columnist

Comments

theQuin

And most certainly, communism is NOT democratic! This paper's choice of community columnists says it all. Look at history, and see what communism has wrought. Without those business owners who employ society, where would "the lower economic classes" be?
Stop crying for handouts, Mr. Kamischke, and start campaigning for the creation of new jobs to help your beloved "lower classes." I guarantee those jobs are not forthcoming without capitalism.

ekwilliams

An outstanding assessment of a developing plutocracy in the US.

jerrysnaville

I wonder how long Mr. Kamischke has been unemployed. (His "Community Columnist" job notwithstanding.)

jenkem

Capitalism has created the highest standard of living ever known on earth. The evidence is incontrovertible. The contrast between West and East Berlin is the latest demonstration, like a laboratory experiment for all to see. Yet those who are loudest in proclaiming their desire to eliminate poverty are loudest in denouncing capitalism. Man’s well-being is not their goal.

ekwilliams

This article did not negate capitalism. The writer pointed out that unfettered capitalism is having a negative impact on the social values of equality of opportunity and fairness. There are many compassionate capitalists who consider social and environmental values along with profit and economic growth. Unfortunately they are not the ones with greatest influence on government policy and practice. Our democracy is becoming an oligarchy.

GHSkyGuy

Republic! Republic!

GHSkyGuy

Last I knew the United States of America was a Republic.

Lanivan

One of the motivations behind the Corporate promotion of States Rights and the diminution of the Federal Government is that it enables them to roam from state to state where they have far more power, control, and manipulative superiority. If a state adopts a piece of legislation the Corporation doesn't like, it just threatens to move out of state, leaving behind a trail of unemployed people, empty buildings and parking lots, and a big reduction in tax revenues. Big Corporations can bribe their way into getting things they feel will be beneficial to them, such as Right-To-Work laws that studies show reduces the wages of both union and non-union workers by about $6,000/yearly.

Transnational Corporations are in an even more powerful position. They, by definition, have no real patriotic obligations to local communities - the world is their oyster. Through conservative groups like ALEC, the Mackinaw Center for Public Policy, the Mercatus Center, and others, Transnationals can buy a great deal of influence to steer state legislation in their direction - and for a whole lot less than they pay their Washington lobbyists.

There are many Corporations, like Koch Industries, the wealthiest privately owned corporation in the US, who eschew democracy and put enormous pressure on politicians - both at the State and Federal levels - to adopt anti-environmental, anti-climate change, anti-renewable energy, anti-regulation, anti-union, anti-minimum wage, anti-unemployment insurance, anti-consumer protection, and other legislation that diminishes the democratic process, and the middle class, while it's at it.

Democratic virtue is not in their handbook - even the Supreme Court has ruled that Corporations are People. The proof is in the pudding - wealth and income inequality and disparity is exploding.

Tri-cities realist

I wonder if you could make it through an entire comment session without mentioning the Koch brothers? Dyankee, you don't run a book on the side, do you? Although the over/under would probably be easier to predict.

Lanivan

It's not the mention of Koch Industries that bothers you, it's the fact that the comment is accurate and based on easily obtained data. After all, if the Koch Bros and Koch Industries are innocent, why in the world would I be compelled to single them out? Common sense tells us that I would single another guilty entity out, now wouldn't it?

Your reply is flip and disingenuous. Perhaps you should do more reading? Less denial? More realism?

 

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