Two hundred and thirty-two years ago, our forefathers declared independence from a distant monarch and parliament to preserve their liberty.
Such are the thoughts I have on this Fourth of July, having recently finished reading “Supercapitalism” by Robert Reich. (So many others affiliated with this blog have read the book that I felt compelled to do so, too.)
Reich offers a simple but compelling thesis: Since the Not Quite Golden Age of the 1950s, an era in which industrial oligopolies and labor unions created a stable, growing economy in which the wealth was widely shared (excluding African-Americans, of course, which was why he calls it the Not Quite Golden Age), various economic forces have created more competition and eroded the power of the cartels and unions. Consumers have benefited from better, cheaper consumer products, and shareholders have profited from higher-performing investments. But those gains have come at the expense of Americans in their roles as employees and citizens. Incomes for all but a few have stagnated, and Americans are losing faith in democracy.
While some might differ with his core thesis — for instance, the prosperity of the Not Quite Golden Age may have owed more to America’s preeminent position in the world following World War II than to its oligopolistic industrial structure — I find aspects of Reich’s book very persuasive. In particular, I found myself agreeing with his analysis in the chapter “Democracy Overwhelmed,” in which he describes how the political process has been taken over by moneyed interests.
Business competition has become so intense, Reich argues, that “competition has spilled over into politics, as corporations have sought to gain competitive advantage through public policy.” The vast influx of money into Washington, D.C., has transformed the once-dowdy city into an imperial capital with the highest incomes in the country and all the trappings of wealth and excess. The number of lobbyists has increased, the money spent on lobbying has increased, the amount of money spent on campaign contributions has increased. Politically, businesses are nonpartisan. It’s all about gaining the power to influence the machinery of legislatio and regulation to maintain competitive advantage.
I find this description to be right on target. I differ only in assessing how it came to be. Reich blames the trend on increasing business competition, or supercapitalism. “The demands of corporations seeking to influence the policy process have grown as competition among them has intensified. It has been like an arms race: The more one competitor pays for access, the more its rivals must pay in order to counter its influence.”
That’s accurate as far as it goes, but it leaves out one important consideration: The business takeover of Washington, D.C., occurred only after the national political class had accrued unprecedented power over the economy. Since the New Deal of the 1930s, government has inserted itself into one economic sphere after another. The political class was a critical enabler to the takeover. Politicians and their minions and hangers on gain prestige and wealth through brokering the transfer of wealth from one industry to another, from one segment of society to another. The rise of Big Government was paved by legions of apologists and justifiers who moved public opinion to accept the need for intrusive government, as well as a multitude of judicial rulings that tore down traditional barriers to the accretion of government power.
Be that as it may, the biggest “industry” in the United States today is indeed politics. For the most part this industry does not create wealth — it brokers wealth. Unfortunately, the trends that are so grotesquely on display in Washington, D.C., have filtered down to state capitals and courthouses across the country as well. The main difference between politics in Washington and Richmond is the size of the political class, and the constituencies that ply the politicians for favors.
The corporate and professional interests that dominate the system at the state and local level correspond neatly with the array of legislative and regulatory powers that have accrued to state and local governments. At the top of the list is the cluster of businesses — developers, home builders, Realtors, construction and engineering firms — that make their living through the development of real estate and building of infrastructure. This is the “growth” lobby that we have discussed before on this blog.
Close behind in power and influence are the electric and gas power companies, whose profits are regulated by the State Corporation Commission. Then comes the financial and insurance industries, the legal profession, the health care industry, and the educational profession. To see who the key players are in Virginia and how much they spend on influence the political process, you need go no further than the Virginia Public Access Project list of top donors by industry.
As businesses take their marketplace competition into the political sphere, and as the political class enlarges the scope of its powers, the national preoccupation of America becomes the transfer or protection of wealth, not the creation of it. Rather than focusing on innovation and productivity, the real sources of prosperity, we collectively turn to government for what we want, and we battle over who pays for it. Our institutions are increasingly archaic, unable to adjust to the emerging Knowledge-era wealth creating system, and our national character is enervated. Once a nation of entrepreneurs, we hold out the tin cup. I can see no countervailing trend that will change this.
God bless America. I still love this country, even though I despair for it.