Required Reading

Tom Streithorst, in the LA Review of Books (and isn't LARB much easier to pronounce than NYRB?) offers an economic history of the past couple of centuries and tells us where we are today. I do think it's best for you to read it, but I will hit a couple of high points.

Not so much in rural Bangladesh or Burkina Fasso, perhaps, but all around the the global north and more and more of the south, "we live like Gods," as Streithorst says. Not long ago at all, the average American or European worked from dawn till dusk, lived in what we would today consider a hovel, and spent more than 50% of income on food. People in most of the world (think Irish famine) were continually one bout of bad weather or a plant disease away from starvation. Most people could scarcely read, and had never been a few miles from the place they were born.

It's nearly unimaginable how different this world is. Middle class people spend maybe 2 or 3% of their income on food. We have closets full of clothes and most people refill them every year. Less than a room and a half per person is considered residential overcrowding. Just about every family that wants to owns a machine that can transport them 500 miles away in a day.

And yet, and yet . . .

People feel financially insecure, they are struggling to get by day to day, and hardly anyone can achieve security for their old age. The economy can't supply gainful employment to everyone who wants it and much of what is available won't support a decent standard of living. Conservatives think the answer is to cut taxes and let wages fall further, so that capitalists can make more on investments and will find it worthwhile to hire more of those cheap workers.

Wrong, and completely upside down. Capitalists will hire workers when somebody wants to buy the stuff they have to sell. They'd rather make a profit that gets taxed than none at all, but again, they won't invest if they can't sell their crap. And right now, they can't. The reason is that not enough people have enough money to buy it.

Productivity defined as output per hour of work has climbed steadily throughout the past 2 centuries, but since 1970 or so, average wages in the U.S. have been stagnant. This is because capital has displaced labor. But if people don't have money to spend, they can't buy stuff and put each other to work. So, they economy was sustained by a series of asset bubbles and rising debt. This put money in people's pockets until the bubbles burst and they couldn't borrow any more. Now we're stuck.

The answer is that we need a totally new kind of economy in which wealth is, yep, redistributed. Government needs to spend money by putting people to work doing good stuff -- Streithorst favors high culture, arts and the life of the mind, others might favor more subways and replacing all those water mains that keep breaking, but there's no reason we can't do it all.

But this has to be a permanent state of affairs. Once you have too much stuff, your problem is not supply, it's demand. And no, John Galt and the Koch brothers can't create that.