Biden Has Revived Democratic Capitalism & Changed the Economic Paradigm: Robert Reich
Biden has revived democratic capitalism- & changed the economic paradigm, Robt. Reich. The Guardian, 2.6.23. Ed.
- The president’s domestic successes offer a rebuke to disciples of Reagan: the ‘free market’ has never existed - 🪦
How can inflation be dropping at the same time job creation is soaring? It has taken one of the oldest presidents in American history, who has been in politics for over half a century, to return the nation to an economic paradigm that dominated public life between 1933 and 1980, and is far superior to the one that has dominated it since.
Call it democratic capitalism.
The Great Crash of 1929 followed by the Great Depression taught the nation a crucial lesson that we forgot after Reagan’s presidency: the so-called “free market” does not exist. Markets are always and inevitably human creations. They reflect decisions by judges, legislators & govt. agencies as to how the market should be organized & enforced – & for whom. The economy that collapsed in 1929 was the consequence of decisions that organized the market for a monied elite, allowing nearly unlimited borrowing, encouraging people to gamble on Wall Street, suppressing labor unions, holding down wages, & permitting the Street to take huge risks with other people’s money.
Franklin D Roosevelt and his administration reversed this. They reorganized the market to serve public purposes – stopping excessive borrowing & Wall Street gambling, encouraging labor unions, establishing social security & creating unemployment insurance, disability insurance & a 40-hour workweek. They used government spending to create more jobs. During WW2, they controlled prices & put almost every American to work. Democratic & Republican administrations enlarged & extended democratic capitalism. Wall Street was regulated, as were television networks, airlines, railroads & other common carriers. CEO pay was modest. Taxes on the highest earners financed public investments in infrastructure (such as the national highway system) & higher education.
America’s postwar industrial policy spurred innovation. The Dept. of Defense developed satellite communications, container ships & the internet. The National Institutes of Health did trailblazing basic research in biochemistry, DNA & infectious diseases. Public spending rose during economic downturns to encourage hiring. Even Nixon admitted “we’re all Keynesians”. Antitrust enforcers broke up AT&T & other monopolies. Small businesses were protected from giant chain stores. By the 1960s, a third of all private-sector workers were unionized. Large corporations sought to be responsive to all their stakeholders – not just shareholders but employees, consumers, the communities where they produced goods & services, & the nation as a whole. Then a giant U-turn. The Opec oil embargo of the 1970s brought double-digit inflation followed by Fed chair Paul Volcker’s effort to “break the back” of inflation by raising interest rates so high the economy fell into deep recession.
All of which prepared the ground for Reagan’s war on democratic capitalism...
More, https://www.theguardian.com/commentisfree/2023/feb/06/joe-biden-democratic-capitalism-changed-economic-paradigm-reagan-free-market
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[Robert Reich is a former US secretary of labor, a prof. of public policy at the Univ. of Ca., Berkeley, & author of Saving Capitalism: For the Many, Not the Few & The Common Good. His new book, The System: Who Rigged It, How We Fix It, is out now. He is a Guardian US columnist. His newsletter is at robertreich.substack.com]
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- Also: 'Schools and universities are ground zero for America’s culture war,' The Guardian, 2.5.23, 📚
https://www.theguardian.com/commentisfree/2023/feb/05/schools-and-universities-are-ground-zero-for-americas-culture-war
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