The transformation from the Industrial Era to the Information Era changes everything. It doesn’t eliminate everything, but it transforms everything. Because technology permeates every aspect of a society. Technology touches all.
Starting in earnest in the 1980s the technology driven changes hit sector by sector of the economy. Increases in productivity – and the tax cuts (not the tax increases as Reich says in Supercapitalism) created new capital. So much that in the late 90s the Clinton administration crowed that the old business cycle of standard economics – expansion and contraction – was over. Then, came the dot com bubble burst. And 9-11. And first two U.S.-initiated campaigns in a long, long World War.
In previous installments we’ve discussed the impact in the changed job and income market for America and Virginia and some structural answers. At least two issues remain: How to deal with the fundamental changes in businesses or “What to do about Walmart?” and what about the concentration of wealth in businesses and persons in a representative democracy? Consider Robert Reich’s findings.
Big box businesses have wiped out main street small businesses. Family run stores have been eliminated by Walmart. Communities are lost when the Mom and Pop stores go away. Walmart doesn’t provide health benefits and pushes wages to the lowest levels possible. And, across the board there is no economic security in a lifelong job – outside the U.S. Congress. Moving jobs overseas also leads to environmental degradation and violations of human rights.
- Big boxes aren’t the problem. I’ve read the analysis, but didn’t keep the numbers, on small towns and Walmart. The number of people who lost income vs the number of people who have more money because they could buy cheaper products was astounding. It would make the utilitarian David Hume proud. The greater capital that stayed in the local economy creates jobs. It proliferates the big boxes from Walmart to the Lowes or HD, Bed Bath and Beyond (female equivalent of a hardware store), box book store, chain restaurants, etc. etc. The big boxes create jobs.
One may not like the homogenized look of the nation – and I see it as I travel on business. The boxes aren’t evil economic death stars. They will come and go and evolve. Like Target, etc..
The Waltons of Arkansas and Bill Gates make good boogey-men, but they aren’t the problem. If We, The People, do more to create and recycle capital in Virginia then we all will benefit. Capital, even capital kept in local economies by big boxes produces Mom and Pop businesses to provide services cut trees, do yards, clean houses, care for kids or pets, detail cars, build pools, clean pools, change gutters, etc.
- Production matters. Virginia’s proximity to DC and a natural port provide the Federal funds that won’t stop until the U.S. surrenders as a Super Power or our economy collapses after a comet strike. The Feds will dump capital because for the time foreseeable DC is New Rome. Agribusiness, The Bay, forestry, and mining remain vital to our economy. Virginia needs to make sure we don’t kill those golden geese.
Cutting corporate taxes to zero (with the possible exception for corporate bad behavior as defined in earlier posts) and reducing personal taxes will help small businesses and large corporations make stuff in Virginia.
Before we go to the last installment on what the transformation means politically, let’s consider a basic paradigm of government and business in a mixed economy.
Our governments have checks and balances at every level. They work imperfectly, but they are a constraint against the corruption that power brings. Our government is organized for imperfect humans.
Business doesn’t have a check or balance other than the market – and when government intervenes. Business is organized for efficiency. There is no brake on the abuse that power brings.
Except unions and shareholders can provide a brake. It’s most effective to use market forces to change business behaviors.
Next: Transformed and transformed politics in the new economy.