Endless Curiosity

December 13, 2009

The Rich get Richer

Filed under: Economics, Politics — Alec @ 3:32 pm

I can’t blame the rich for wanting to hang on to what they have, and I can’t blame them for framing the issues in a way that benefits them. That said….

Supposedly the free market is the best hope for a good life, the best hope for freedom, the best hope for humanity. It’s faster than a speeding bullet… oh wait, that’s something else. Anyway, it’s supposed to be pretty good.

Then the question is why are there so few countries that implement a free market? Certainly we don’t – not with all the lobbying and subsidies that go on. But at least we pay lip service to it: “The free market is what made America great and what keeps America great.”

I beg to differ. The free market is the cause of untold human suffering. Think back to the Great Depression. Think now of the Great Recession. Read Naomi Klein’s masterpiece, The Shock Doctrine [review, summary].

Before you get too wound up, I think a certain amount of capitalism is a wonderful thing. It’s what helps lift people out of poverty. The question is how much freedom should the Captains of Capitalism have, and how much oversight and control should governments have?

The interesting thing about America is that it’s NOT the free market that made it great – it’s government handouts. Think back to the founding of this country. The government simply gave away land to people. Move west, kill the Indians and animals, get free land. That was the start of America becoming a Great Nation.

The rise of the Middle Class came much later – basically after WWII – again as the result of huge government handouts. The government basically gave away education, houses, and jobs(*). Nothing to do with the free market or capitalism – if you remember, the free market had pretty much destroyed the lives of tens of millions only a couple of decades earlier.

So if Middle Class prosperity is the result of government actions, what does the free market bring? Well, based on what we’ve seen over the last few decades, stagnating wages for the masses (actually decreasing in real terms), and staggering wealth for the people at the very top. As I said, the rich get richer, and the poor get poorer.

* From Gail Collins in the NY Times:

Here’s my version of modern American history. Before World War II, you had a country in which most people lived pretty simple lives. Working-class, rented homes. Living without indoor plumbing was not regarded as the end of the world. Getting an education involved finishing high school.

Then came the war and when it was over, the United States was the last economy standing. And it boomed. The government spent a ton of money to send the returning veterans to college, helped them buy their own homes, and created jobs with huge, ambitious projects like the interstate highway system. Meanwhile, the cost of living was pretty low, especially when it came to housing.

So suddenly you had a country in which most families enjoyed an absolutely unprecedented standard of living: A home of your own, a car, a TV. The occasional vacation. Kids in college.

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