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

Global Warming

Dear Friends,

The human and economic costs of global warming are already immense and will continue to grow even if we take aggressive action to slow global warming.  While the estimates vary, 400,000 people currently die each year from the impact of global warming.  Projections indicate that number will at least double by 2030.  In fact, it is projected that 500,000 people will die from global warming's impact on agriculture alone each year by 2030.  The economic cost of global warming is also staggering and increasing.  Global warming is reducing worldwide GDP by about 1.6%.  By 2030, it will reduce US GDP by 2% and worldwide the projections of the negative impact of global warming on worldwide GDP by the end of the century will be 20-23%.  One cost benefit analysis indicates that the impact of global warming is reduced by $5 for every dollar invested in reducing it.

I cannot support a candidate for public office who does not acknowledge that human activity is causing global warming and who does not vigorously support aggressive actions to reduce it.  What can we do?

The cost of wind and solar power (unsubsidized) is now less than all kinds of fossil fuels.  Capital investment in renewable fuels has exceeded that for fossil fuels in each of the last five years.  Last year investment in renewable fuel power generation was 50% more than that in fossil fuels.  California hit a record one day last March when it generated over 50% of its electricity by renewable energy.  California currently has committed to providing 50% of its electricity needs from renewable sources by 2030. There are efforts underway to move that date to 2025 and to provide 100% of its electricity from renewables by 2050.

The efficiency of batteries and their cost are dropping rapidly as is the installed cost of solar panels.  The cost of electric cars is also dropping rapidly.  A dramatic switch to electric cars would have a significant impact on emissions.  India has committed that only electric cars will be sold there by 2030.  France will ban the sale of fossil fuel cars by 2040.  Britain will ban the sale of new fossil fuel cars by 2040, and all cars on the road will be emission free by 2050.  In Norway all new passenger cars and vans will be emission free by 2025.  Other countries are moving toward similar goals.  Volvo has indicated that as of 2019, it will only produce cars that are either all electric or hybrid.  The United States has done nothing of substance.

The biggest drawback to fully utilizing renewable energy sources is the state of the electric grid in the  United States.  Fortunately, fixing and upgrading the electric grid would have two great results.  First, it would allow for a more rapid expansion of electric generation by renewables.  Second, it would provide a lot of good paying jobs that cannot be shipped overseas.

It is estimated that 80% of all electricity could be produced by renewables by 2050 based on the technology available today.  But the technology is improving and becoming cheaper dramatically every year.  If you want to read one article about the future of renewables, I recommend "Can the World Run on Renewable Energy".  It is published by knowledge@wharton here.

All we are missing to quickly move to producing virtually all our electricity and much of our energy needs is the political will to do so.  Politicians must stand up to the fossil fuel industry and move us to all renewable energy.  I will not support any politician who is not committed to eliminating the use of fossil fuels in the next two decades.

Thanks for reading and please comment,
The Unabashed Liberal

What Candidates Should I Support?

Dear Friends,

I cannot bring myself to blog about President Trump or the Republican Party and what they are doing to this country and the world.  There is more than enough analysis and commentary about those topics.

I am, however, concerned about the Democratic Party and feel compelled to write about it.  We need a clear progressive vision for our country, and we need to advocate for that vision in all 50 states and all 3,142 counties in the country.  I have chosen a few a issues that for me are critical.  I will not support a candidate or a party whose views are not consistent with mine on these issues.  I will no longer support the lesser of two evils even though I might be forced to vote on that basis.

The idea that the Democratic Party needs to move to the center is a complete fallacy promulgated by the Democratic Party establishment to maintain its power and big money relationships.  The vision that I am proposing is not an extreme left wing vision.  Some of the issues are not really left or right political issues.  The individual policies to achieve the vision have broad support among the American people even though they have never been given the media coverage they deserve.  Today I will just provide the list with a short explanation.  In future posts, I will cover each one in more detail.

Global Warming
I put global warming first because it is the biggest existential threat we face.  Fossil fuels must remain in the ground.  We need policies that demand the use of solar, hydro, geothermal and wind power.  We must reduce our energy usage and dramatically increase our efficiency.  We cannot transition slowly to non-fossil fuels and being more efficient.  We must move forward immediately and aggressively if we are to save our planet for our children and grandchildren.  While the Paris Accord was a start, it was too little, too late.  We must move faster.

Education
We must provide free high quality public education from pre-k through college, including the arts.  Education is essential to a happy productive life as well as to a functioning democracy.

Health Care
Health care is a right not a privilege.  The government must provide health care for all.  We must have Medicare for all now.

Income/Wealth Inequality
We must immediately enact policies that reduce income and wealth inequality.  Education and universal health care are part of the solution.  In addition, we must significantly increase taxes on the wealthy including income and estate taxes.  We must regulate Wall Street and big corporations to reduce their economic and political power.  We must enact a minimum wage that provides a living above the poverty line (i.e. $15/hour).  We must support unions to provide a level negotiating field for workers and managements.

Voting Rights
We need strong voting rights laws to prevent voter suppression and disenfranchisement.  We need to end gerrymandering.  We need to overturn Citizens United.  We need to understand that money is not speech.  In fact, money denies the speech of those without it.  We need to create a culture where everyone has the right to vote and everyone votes.

Discrimination
We must end discrimination of all kinds.  Our country fails to provide racial, gender, economic, social, or criminal justice, among others.  The current anti-discrimination laws must be strengthened and aggressively enforced.  Those laws must also be dramatically expanded to include types of discrimination that are not currently covered, particularly protecting LGBTQIA people's rights.  Notwithstanding current laws, we know we live in a society with deep, broad and intransigent institutional bias.  We must create a culture that eliminates such bias.

Financial Safety Net
We must be a society that ensures that all members of our society have an acceptable minimum standard of living, including food, shelter, health care, financial security, education and respect.  Our current programs are falling far short of this result.  They need to be strengthened and expanded.

Jobs
The government can and should create jobs.  The best way to do so is by fixing our broken infrastructure, properly maintaining it and expanding it as new technologies and needs arise.  The government can use private companies to build and rebuild our infrastructure, creating lots of good jobs.  These jobs can help with some of the other issues discussed above such as developing green technologies and an efficient energy grid.  The government should also support research and innovation that will lead to new jobs and a growing economy.

Immigration
We are a nation of immigrants.  Yet it seems that each new group of immigrants is treated poorly by those that came before them.  We have millions of undocumented people living in our country who belong in this country, who contribute to this country and who must have a path to citizenship, security in their lives and the respect they deserve as human beings.  The way we treat immigrants today is a travesty and flaunts every tenet of how a civilized nation should behave.

Foreign Relations
I realize I am giving this topic short shrift by putting it last and lumping all the issues together into only one paragraph.  However, I believe our foreign policy should flow directly from the values and vision espoused in our domestic policy.  All human beings deserve respect, freedom, justice, education, health care, jobs, etc.  If we base our foreign policy on these tenets, we would demand a two state solution to the Israeli/Palestinian conflict, we would spend more time, money and effort on peacefully solving conflicts than on violently imposing our will, we would not back dictators because it is good for business, we would seek total nuclear disarmament, etc.

Thanks for reading and please comment,
The Unabashed Liberal

What is this Presidential election really about?

Dear Friends,

There are many very important issues in the current Presidential election including income inequality, institutional and persistent racism, universal healthcare, gender equity, tax fairness, discrimination in the workplace, religious bigotry, women's reproductive healthcare, and the list goes on and on.  However, in my view, there are two issues that rise above all the others because they are each, in their own way, existential issues, and they are interrelated.  The two issues are global warming and America becoming an oligarchy.

There can be no question that the monied interests control the Congress and our political system.  The monied interests had disproportionate impact prior to the Citizens United decision and have almost completely taken over the political process today.  All of the campaigns of the Presidential candidates from both major political parties, except for Bernie Sanders' campaign, are funded by monied interests.  Bernie Sanders' success, despite the fact that the average donation to his campaign is less than $30 and despite the fact that his campaign has no PAC supporting it, is nothing short of a miracle.  If we do not break the control of the monied interests soon, we will have a very well entrenched oligarchy which will be difficult, if not impossible, to dislodge.  There is no way that "money controlling politics" can be changed incrementally.  The monied interests will not permit it.  Bernie Sanders is right.  Only with a political revolution can the "money in politics" problem be solved.

I have written before about the fact that climate change and global warming are the biggest threat to us (here).  Depending on who is doing the estimating, climate change is responsible for somewhere between 100,000 and 400,000 deaths worldwide per year and those numbers will be increasing for the foreseeable future regardless of any actions that we take now.  The economic cost of climate change is so staggering that I cannot comprehend the numbers.  In 2015 in the United States alone there were 10 weather events where the damages for that event were in excess of $1 billion.  Worldwide the damages caused by climate change were $1.2 trillion.  In addition there will be millions of people displaced as the sea levels rise and persistent droughts occur, which will continue to happen even if we take bold action now.

There are also substantial health risks associated with global warming.  The zika virus is the latest one to hit the news.  While it may be too early to say that the zika epidemic is caused by global warming, it is clear that the spread of the virus is facilitated by global warming, just as other health problems will be accelerated by global warming.  The following paragraphs from an article in The New York Times (here) summarize the point very well, and for sure it will not just be mosquitos that will rapidly expand the scope of health problems as the world warms.

But these same experts added that the Zika epidemic, as well as the related spread of a disease called dengue that is sickening as many as 100 million people a year and killing thousands, should be interpreted as warnings.
Over the coming decades, global warming is likely to increase the range and speed of the life cycle of the particular mosquitoes carrying these viruses, encouraging their spread deeper into temperate countries like the United States.
Recent research suggests that under a worst-case scenario, involving continued high global emissions coupled with fast population growth, the number of people exposed to the principal mosquito could more than double, to as many as 8 billion or 9 billion by late this century from roughly 4 billion today.

History is replete with examples of scarcity and shortages causing hatred, bigotry, violence and war.  When, as a result of global warming, we do not have enough water to drink and grow food, millions of people are displaced from their homes by drought and rising sea level, and rising temperatures speed the spread of diseases, we will experience even more hatred, bigotry, violence and war than we do today.

We are well past the point where incremental changes can have a significant impact on the terrible devastation of global warming.  The carbon that we have already released will increase these problems for a long time regardless of what we do now.  Incremental changes will simply delay for a few years when we hit the tipping point after which the cumulative impact of human activity will cause warming that will destroy us.  A blog by Anthony Barnosky and Elizabeth Hadly at HuffPost Science (here) entitled "Five Climate Tipping Points We've Already Seen, and One We're Hoping For" makes my point very well.  The blog discusses five tipping points that have already occurred.  The one the authors are hoping for is a groundswell of political support and will to actually make the necessary changes.  Here are excerpts from the final paragraphs of that blog:

All of these examples, and many more, indicate that the changing climate has already tipped the world into a new normal, compared to what life was like when today's middle-aged adults were born. So far, we're coping, but not without great expense. 

The costs, both in personal suffering and economic losses, will increase dramatically as new, bigger climate-triggered tipping points hit in the next few decades, if we continue business-as-usual green-house gas emissions...

While it is too late to go back from the climate-triggered tipping points we've already caused, it is not too late to avoid the more severe ones that threaten our near future. Just as solid science alerts us to impending dangers, it also maps out feasible paths to minimizing risks. In the case of climate change, the solution is quickly reducing greenhouse gas emissions to essentially zero, through replacing fossil fuels with clean energy. Studies indicate it is technically and economically feasible to replace coal, oil, and gas by 2050 with a combination of carbon-neutral approaches, including solar, wind, wave, and sustainable biofuel energy. 

That cannot be accomplished of course, without another kind of tipping point: a groundswell of popular support and political will to deal with the problem. If we do not cross that critical threshold soon, it will be too late...

The monied interests that control our political process today for the most part resist the scientific proof of man-made global warming and even those that acknowledge the science want only incremental changes so as not to disrupt the status quo in the short term.  It is clear that incremental changes will not reverse the horrific trend of global warming.

Hillary Clinton is running as the candidate for incremental change.  Bernie Sanders is running as the candidate for a political revolution with bold solutions for both of these existential problems as well as the other important issues facing us today.

I will be 70 years old later this year.  My white privilege and financial situation will protect me from the worst impacts of these two existential problems, but there will be no amount of wealth or privilege that will protect my grandchildren and all people of future generations.  We need to act now and to act boldly and radically to prevent the United States from permanently becoming an oligarchy and to leave the carbon in the ground so that our grandchildren can live in peace and harmony on an Earth that is healthy and stable.

Thanks for reading and please comment,
The Unabashed Liberal