Capitalism in America, Part 1

Dear Friends,

I am in France for a couple of months and as I reflect back on America from outside its borders and as the year ends, I consider the idea that capitalism as practiced in the United States has failed us both economically and politically and that is why we are where we are today - in a real crisis.

As you know, I am very disillusioned with the Democratic Party so much so that I began to consider joining the Democratic Socialists of America.  Statements by leaders of the Democratic Party establishment make it clear to me that the Democratic Party has lost its way.  When Nancy Pelosi was asked why the Democratic Party did not move to the left on economic issues the way it has on social issues, her response was "We're capitalists.  That's just the way it is."  She then went on to explain that capitalism in the United States had taken a turn to working only for those in power, but she still defended the idea of capitalism as is.  She would never criticize her Wall Street donors or suggest significant changes to the economic status quo.  In that regard, she epitomizes the Democratic Party establishment.

I have decided not to join the Democratic Socialists of America even though I agree with many of their positions, e.g. $15 an hour minimum wage, Medicare for all, pro-union, anti-discrimination of all kinds, etc.  I will not join them because I am not ready to completely abolish capitalism in the United States.  I am, however, ready to fight to change the way capitalism is practiced in the United States.

Capitalism and socialism are different forms of economic systems, but I believe the ultimate goal of any economic system must be to advance the economic interests and provide better living conditions for all in a sustainable manner.  In the United States from time to time, capitalism has done a good job of working towards this goal and at other times (such as the last 3 to 4 decades) has done a terrible job.

One way to measure whether or not capitalism is advancing the economic interests of all Americans, is to look at the wealth and income disparity in the country.  It is important to remember that wealth disparity and income disparity, as the names imply, are not the same.  First let's look at wealth disparity.  The following chart is from an article on WhoRulesAmerica.net entitled Power, Politics, & Social Change by G. William Bomhoff (here).  

Table 4: Share of wealth held by the Bottom 99% and Top 1% in the United States, 1922-2013.

	Bottom 99 percent	Top 1 percent
1922	63.3%	36.7%
1929	55.8%	44.2%
1933	66.7%	33.3%
1939	63.6%	36.4%
1945	70.2%	29.8%
1949	72.9%	27.1%
1953	68.8%	31.2%
1962	68.2%	31.8%
1965	65.6%	34.4%
1969	68.9%	31.1%
1972	70.9%	29.1%
1976	80.1%	19.9%
1979	79.5%	20.5%
1981	75.2%	24.8%
1983	69.1%	30.9%
1986	68.1%	31.9%
1989	64.3%	35.7%
1992	62.8%	37.2%
1995	61.5%	38.5%
1998	61.9%	38.1%
2001	66.6%	33.4%
2004	65.7%	34.3%
2007	65.4%	34.6%
2010	64.6%	35.4%
2013	63.3%	36.7%

Sources: 1922-1989 data from Wolff (1996). 1992-2013 data from Wolff (2014).

As an update to the chart, in 2016 the top 1% held 38.6% of the wealth, according to the Federal Reserve (here).  As you can see, we had the worst disparity in wealth right before the Great Depression and the stock market crash of 1929.  We then had lower rates of disparity during the 1950s, 60s and 70s.  But starting in the 1980s disparity has been constantly on the rise hitting a high in 1995 followed by modest declines and a major decline with the early 2000s recession.  Since then disparity has continued to rise and 2016 provides the worst disparity since the Great Depression.  There can be no doubt that with the passage of the Trump tax bill, wealth disparity will continue to rise.  

Income inequality has shown a similar disturbing trend as can be seen from the following chart.

Figure 3. Share of total income earned by people in the top 1 percent of the income distribution

Source: World Income and Wealth Database.

As you can see there is a close correlation with the changes in the wealth disparity.  The disparity peaks just before the stock market crash of 1929, drops to much more reasonable levels during the 1950s, 60s and 70s and then begins its march upward with just little blips for recessions to once again be close to an all time high.  David Leonhardt has a piece in The New York Times (here) entitled "Our Broken Economy, in One Simple Chart".  He provides another look at this subject.

This data demonstrates that capitalism as practiced in the United States is not serving the economic interests or improving the living conditions of all.  Data is equally clear that capitalism as practiced in the United States is not providing a sustainable model.  Perhaps the best demonstration of that fact is global warming and pollution.  Businesses operated under the United States version of capitalism are not required to account for the secondary costs and damages to the society of their actions; consequently the businesses make more money and the society bears the ecological cost of their activities.  At certain times in the Untied States, legislation has attempted to require the businesses to pay these costs as with the superfund legislation but even in the best of times, these efforts were too little too late.  The Trump Administration has done everything it can to eliminate or reduce the requirements that force businesses to pay for the secondary expenses they place on the society.

Global warming is an existential threat to the earth, and the United States has contributed more carbon emission over time to this crisis than any other country.  Yet even under the Obama Administration, capitalism as it is practiced in the United States failed to provide a sustainable economic model and under the Trump Administration, we are even worse.  The continued use of fossil fuels will destroy the earth and our capitalist system has no mechanism for curbing their use.  Capitalism, left unchecked, will never provide an environmentally sustainable system.

There is no doubt that capitalism as practiced in the United States has failed in its ultimate goal to advance the economic interests and provide better living conditions for all in a sustainable manner.  In another post, I will discuss how capitalism has also failed us politically.

Thanks for reading and please comment,
The Unabashed Liberal

Chocolat Chaud

Dear Friends,

As you may remember, Jane and I have been on a quest to find the best chocolat chaud.  As I said in my last post on this critical subject here, we thought that the best chocolat chaud was at the Gran Caffe in Beaulieu.  A couple of people told us that we needed to try the chocolat chaud at Angelina (here).  Well yesterday, we finally visited Angelina on the rue de Rivoli in Paris.  This establishment is much fancier and more pretentious than any of the Villefranche/Beaulieu contenders.  There was a rather long line to get in and I could not wait so I went into the to go line and got a chocolat chaud to go.  It was just under 5 euros.  At first glance it did not appear to be as thick and creamy as the chocolat chaud at Gran Caffe, but with the first sip, I knew that it was a real contender for the championship.  The presentation of the real thing at the table is incredibly beautiful and far more sophisticated than any in Villefranche/Beaulieu.

It may have been better than the Gran Caffe even though it was a warm day and not conducive to chocolat chaud.  The sweet/bitter combo of the chocolat was perfect, and it was perfectly creamy, but it was not quite as thick.  If I consider the price to value ratio, Angelina really doesn't stand a chance.

The 8.2 euros charged by Angelina needs to be compared to 2 to 2.5 euros in Villefranche/Beaulieu.  So I declare the Gran Caffe in Beaulieu as the champion.

Thanks for reading and please comment,
The Unabashed Liberal

Villefranche-sur-mer September 2017 - 3

Dear Friends,

The bay of Villefranche (called the rade) has been very busy for the last few days.  It is the time of the Trophée Pasqui, a celebration of traditional sailboat designs.  It is also still part of the summer season although the end of it.  A couple of days ago there was not just one but two big cruise ships in the rade to spoil the view and drop off way too many people for this beautiful little town.  I am told that somedays in the summer there are three of these monsters.

The cruise ships leave in the evening and the rade becomes much calmer and more beautiful.

Even with no cruise ships when the sailboats begin their daily parade around the rade then continue on to St-Jean-Cap Ferat, Beaulieu and Nice, the rade can seem quite busy.

I have had great fun watching these beautiful sailboats get underway and sail around under full and partial sail.

We will be leaving Villefranche soon, and I among the many things that I will miss will be these graceful sailboats.

Thanks for reading and please comment,
The Unabashed Liberal

Free Public Universities and Technical Colleges

Dear Friends,

While the reasons for the increasing requirement for a college degree to get a job are debated, the fact that a college degree now is the equivalent of what a high school degree was a generation ago is not in doubt.  As a candidate for the Presidency, Bernie Sanders proposed that public universities and technical colleges should be free of tuition and fees.  He later agreed to change that proposal so that public universities would be tuition and fee free for families whose income was less than $125,000.  Senator Sanders has introduced a bill to accomplish this result and provides that the Federal government will pay 2/3rds of the cost and a tax on Wall Street speculation to pay for it.

I think that the current legislation does not go far enough.  We should provide public universities and technical colleges free from tuition and fees to all students qualified to attend.  The estimated cost of such a proposal is around $70 billion a year.  In calculating that cost, there is no offset for revenue generated by the additional jobs or the additional productivity of the workforce.  Nor is there any offset for the reduced demand for Federal government educational loans and grants.  Just as a point of comparison, the Senate just passed a bill increasing the military budget by more than $80 billion without batting an eye.  If that budget is ultimately approved, the United States military budget will be equal to the military budgets of the next ten countries with the largest military budgets.  We would have much stronger country with our current military budget and a workforce that is more college educated with much less debt.

Senator Sanders has proposed to pay for his bill with a tax on Wall Street speculation.  Depending on who is doing the estimating, the proposed Wall Street speculation tax would result in an increase of $60 billion to $300 billion of revenue.  Much of the rest of the industrialized world has or is adopting such a tax, and the United States has had such a tax in the past.  There is no evidence to support the claims by Wall Street that the tax would stifle productive investment.

When the Republicans and establishment Democrats say that providing tuition free public university education would bankrupt the United States, they are lying.  They have been bought by Wall Street.  I will not support any candidate who does not publicly and passionately support tuition and fee free public university and technical college education for all.

Thanks for reading any please comment,
The Unabashed Liberal

Villefranche-sur-mer September 2017 - 2

Dear Friends,

As I am typing, I am scratching the sand out of my hair.  The last few days have been unseasonably windy.  During the periods where the wind is strong, they have been sustained force 5 or 6 and today we saw gusts of at least force 7 on the Beaufort scale.  Force 7 requires spray coming off the waves.  Unfortunately a couple of days ago, three boats were lost one in the marina and two in the bay.  One was rescued off the beach with only mild damage but the other two were lost.  Of course this wind is nothing like the hurricanes back home.  Being hit full blast by even a force 7 wind (28-33 knots) is frightening.  I cannot imagine what 185 mph would be like.  Fortunately, the wind generally settles down in the evening so I can enjoy the view of the bay from our balcony.

The wind has kept us from swimming but really nothing else.  Saturday is market day so we spent an hour or so walking among the various vendors of all things from fruits and vegetable to clothes to mattresses.  We did some provisioning for a few days with asparagus, avocados, strawberries, bread, ham and a sundried tomato pâté.  The man who sells the pâté has many types, all of which are great.  Normally, we get more than one kind and then never finish all that we buy so this time we just got the sundried tomato one.

Once we were properly provisioned, we went home for lunch and then decided to walk to Beaulieu (a couple of miles each way).  We said we were going to get some items that are not available in Villefranche like hair gel for Jane's sister, white out to correct the errors in our French homework and shoe inserts.  All of those items plus food, wine and everything else is available at the Super U.  However, before we went to the Super U, we stopped at the Gran Caffe (no I did not misspell it, it is Italian).  In the winter I have a chocolat chaud because it is probably the best in the world although when we go to Paris we will try the chocolat chaud at Angelina which some people say is the best.  We will see.  But this time Jane had chocolat chaud which was not at its best (not thick enough), and I had un verre de rosé and a delicious sugar cookie with chocolate.  I suspect the chocolat chaud was not up to par because it is out of season, and it is unfair to describe the cookie I had as a sugar cookie, but you will have to travel to Beaulieu to see for yourselves.  The wind was still disrupting the beach in Villefranche when we walked home.  You can see the waves crashing into the beach chairs and umbrellas.

Saturday night we were invited to have dinner with our French tutor and her family.  She has two children ages 2 and 4.  The 4 year old is within a month of our youngest grandchild.  It was fun to talk with them in French as their French was only slightly better than ours.  Our tutor and her partner were perfect host and hostess, and we had a great time and a wonderful meal.  We spoke both French and English, but I have to admit by the end of the evening we were tired and speaking exclusively English.  We will long remember the wonderful evening and their warm hospitality.

Today, we slept in and after breakfast headed to St-Jean-Cap Ferat for lunch.  The walk takes us along  the bay for Beaulieu past the house that used to belong to David Niven.  On the landward side of the walking path, you pass villas of the really, really, really rich; and on the seaside you see yacht after huge yacht anchored in the bay.  In the marina are the smaller boats of 150 feet and under.

There are restaurants lining the marina.  Fortunately the marina was in the lee so the wind was not constant, but the gusts swirled around and knocked signs and menus over with some regularity.  We chose a restaurant that had a menu we liked and a table in the shade.  They were very busy and warned us that it would be slow and it was.  But what did we care, it was a beautiful day, and we could look out over the marina full of beautiful boats or up at the hills behind Beaulieu and see the very tall bridge leading to Eze.

So about three hours later we began our walk home.  The full impact of the wind hit us as we were walking by the beach in Villefranche and a gust hit us from behind.  Fortunately it was from behind because I think the sand would have blinded us, and we would have fallen off the sea wall, if it had hit us straight on.  The good news is despite the big wind and swells coming into the bay all the boats seem to be holding, but we are very happy that we are in our apartment and not bobbing around in a sailboat in the harbor.

Thanks for reading and please comment,
The Unabashed Liberal