Supplement for Fourth Class of P

B. Quick Summary of Stiglitz’ Proposals For Restoration of Democracy and the Economy as Well as Regarding “A Decent Life for All:’

Chapter 8 focuses on three critical areas for accomplishing his political agenda: ensuring fairness in voting, maintaining an effective system of checks and balances in government, and reducing the power of money in politics.

164, final paragraph of Chapter’s “Preventing Abuses of Political Power…” section]… we need to strengthen our systems of checks and balances and the role of our professional civil services and our independent agencies. We need to think more how we can maintain democratic accountability and, at the same time, prevent politicization and enhance the professionalization, efficiency, and efficacy of government.

167, final paragraph of Chapter’s “The Judiciary” section we need to have term limits for Supreme Court justices.

172, final paragraph of Chapter’s “Curbing Campaign Spending” section] corporations should only be allowed to make a political contribution with a vote of a supermajority of their shareholders.

In the Chapter’s “Curtailing Revolving Doors” section, without specifying details, Stiglitz maintains we need norms and ethics to break down the revolving door between government work and employment thereafter, and while discussing the roles of political parties and movements, he offers no specific proposals.

In Chapter 9 [180, first paragraph of Chapter’s “Growth and Productivity” section] he contends that: economic growth depends on two factors: growth in the size of the labor force, and increases in productivity, output per hour. When either one goes up, so does the output of the economy. Of course, what matters is not just growth in national output, but in living standards of ordinary Americans [Wealth of Nations], and that requires not just increases in productivity, but that ordinary citizens get a fair share of that increase. The trouble in recent decades is that neither labor force participation nor productivity have been doing well—and the benefits of what gains have occurred have gone to the top.” To rectify this he proposes:

In regard to labor force growth he maintains that we need to accommodate older employees and employees with children, and we need to make our workforce healthier.

In regard to increases in productivity he maintains that there to be large public investments in basic research, education systems that can support the advance of knowledge, a facilitation of the transition to “a postindustrial economy, and more attention to providing social protections.” He discusses social security, unemployment insurance, universal basic income, the need for reforms to the financial system to provide greater equality, and increasing the minimum wage.

In Chapter 10 Stiglitz discusses four elements of “a decent life:” health care for all, a decent retirement, home ownership, and education. In each of these aspects of a decent life, he claims, the current market has failed “large swaths of our population.” He contends we need to modify the market to provide the requisite essentials for a decent life for all...

C. Of course all of these reforms require funding and Stiglitz proposes [205-206, the first paragraph of the chapter’s “Taxation” section] a progressive, fair, and efficient tax system should be an important part of a dynamic and just society. We’ve described the important activities that government needs to undertake, including public education, health, research, and infrastructure; running a good judicial system; and providing a modicum of social protection. All of this requires resources, meaning taxes. It is only fair that those who have a greater capacity to pay—and who typically gain more from our economy—contribute more. But as was noted in chapter 2, those at the very top actually pay a lower tax rate than those with lower incomes. In these and other ways, matters have only grown worse in the last three decades—with the 2017 tax bill, with its increase in taxes on a majority of those in the middle to finance tax cuts for corporations and billionaires, standing out as perhaps the worst piece of tax legislation ever.

Stiglitz recognizes that such funding reforms are not going to be easy, and he calls for “people power” to accomplish the reforms:

[178-179, third and second to last paragraphs in chapter 8] how do we break out of this equilibrium, this vicious circle where economic inequality leads to political inequality that maintains, preserves, and even augments economic inequality?

It can be done, but only if there is a countervailing power—sometimes called “people power.” Large numbers of truly engaged individuals, in movements such as those described above, with the movements working in concert with each other, through a political party, can be more important than money.

[246-247, the first four paragraphs of the chapter’s “Is there hope?” section] America’s history gives us hope. But any student of the dark history of authoritarianism and fascism in other countries knows this brighter future is not inevitable.

As we’ve noted, America twice before pulled back from extremes of inequality—after the Gilded Age and the Roaring 20s. The challenge today, though, may be even greater than then: there is perhaps even more inequality now, and with recent Supreme Court decisions, money has more power in politics. And modern technology can more effectively translate disparities in money into disparities in political power.

Ultimately, today, the only countervailing power is people power, the power of the voting booth. But the greater the inequality of wealth and income, the harder it is for this countervailing power to be exercised effectively. That is why achieving greater equality is not just a matter of morals or good economics; it is a matter of the survival of our democracy.

With the agenda I’ve proposed, all Americans can attain the life to which they aspire—in ways that are consonant with our values of choice, individual responsibility and liberty. The agenda is ambitious and yet necessary: as bad as things are today, there is a good chance that, with the advances of technology that are already on the horizon, they may get much worse—if we continue on our current course. We may wind up with even more inequality and an even more divided society, with even more discontent. Incrementalist policies—a little more education here, a little more assistance there—as important as they are as components of an overall strategy, are not up to the challenges America faces today. We need the dramatic change in direction that this book’s progressive agenda calls for.

Thus we come to his title: People, Power, and Profits: Progressive Capitalism For An Age Of Discontent. In Chapter 11 Stiglitz talks about the disparity between our values and our social reality. To the extent that one accepts his claim, it would seem as if the requisite course of action is to modify the reality to promote the values! Given his claim that a big reason for the “disparity” is “the myth of the self-made individual,” however, another possibility is that there are many who do not share the values he champions—primarily, perhaps, “equality.”

Here we come to the relevance of the supplemental readings I asked you to look at for this class.

Do the conflicts between sympathy and [bad] morality Bennett discusses show one way to try and address opposing fundamental values?

Can “narrative understanding” help us as we consider significantly differing fundamental values? If so, what should we say to proposals to ban books?

In a multicultural democratic society isn’t it highly likely there will be significant differences in values?

Are there any common values that democracy requires? Can “reflective equilibrium be a social activity (intersubjectively engaged in) or must it be done individually?

Is insurrection an “acceptable form of political discourse” in a democratic society?

Here is the passage from Heather Cox Richardson’s The Death of Reconstruction mentioned in last class:

the [Northern Postwar Vision 1865-1867] of a society based on the labor theory of value encompassed almost every aspect of life: it was a worldview Adherents of the free labor idea believed first of all in the sanctity of private property for without the guaranteed right to the product of his own labor, no man would desire to work. The free labor system also presupposed that all benefited from increased production, since more staples would allow the economy to diversify, permitting greater employment and greater investment in technologies that would magnify the value of a person’s labor….

Although it recognized that individuals at different stages in their careers would enjoy different levels of prosperity, the free labor ideal was egalitarian. Every man could rise…so long as he was willing to work hard. Followers of the free labor theory abhorred the idea of the concentration of wealth, recognizing that monopolies of money or land would force poor individuals to become permanent wage laborers, or, at the very best, be forced to pay unreasonable prices for the land and tools they needed to become independent…

The free labor idea required certain qualities in a worker. By the 1850s, prosperous or at least upwardly mobile Northerners of both parties had begun to perceive two types of American laborers. One fit the free labor model, the other did not. On the one hand were the “good workmen, who worked hard and skillfully, lived frugally, saved their money and planned to rise as individuals through their own efforts. These men strove for education and used their ballots intelligently to protect public officials who would protect property and the fee labor system. Through their own efforts, good workmen gradually rose to become prosperous, often owning their own workshops and employing men themselves. If they failed to do so, they or their womenfolk usually became a part of the “deserving poor” to whom alms should be given….

In contrast to the good workers were those who followed Democratic leaders, who looked to the history of England and the theories of Ricardo and Malthus to argue that the condition of workers naturally declined over time and that polarizing wealth meant the creation of economic classes locked in inevitable conflict. Adherents of the free labor system saw these workers as inferior, disaffected; they were unreliable, unproductive, fond of drink, and inclined toward cooperative action against employers.[1]

Her discussion elaborates how large-scale immigration, the Northern industrialization and the moves of large numbers of people from rural to urban setting brought on by the war, and the opening of the West led to increasing tension between these competing views with consequences for both Reconstruction and for the rising labor struggles.

Note: (click on the note number below to return to text for the note)

[1] Heather Cox Richardson, The Death of Reconstruction (Cambridge: Harvard UP., 2001), p. 8-9.