If you've followed my ruminations, you know of my growing concern
about the health of our American political economy. Now two books, perhaps the two most influential
published thus far in this young century, have moved me from decrying our republic's
illnesses to seeing pathways to healing.
The first is Thomas Piketty's Capital in the Twenty-First Century;
the second, Robert Putnam's Our Kids. The American Dream in Crisis.
It's taken me months to thoroughly read Capital --
all 655 pages of it, some chapters three times (the 76 pages of turgid notes were
skimmed through; I did not attempt his on-line technical appendix.) I daresay few who have so praised or so attacked
Piketty read Capital any more thoroughly than I, though many of them likely understand
it better. Nonetheless, his findings
ring clear to me: inequality is an inherent feature of capitalism, whether pure
market capitalism or as we practice it.
What
matters is not income inequality, the focus of so much attention and empty political
chatter; what matters is wealth inequality, i.e., the accumulation of
capital and its inevitable concentration.
So long as returns on capital exceed the growth rate of an economy, which
in a developed economy is always the case, capital will concentrate in few
hands and inequality will grow, along with those hands' access to political
machinery, to doors of superior educational institutions, to levers of advantage
and opportunity. What we must do is
interrupt the concentration of wealth. Piketty
admits that the ideal, a wealth tax, is virtually impossible for any one
country or jurisdiction to pull off given the fluidity of capital movement across
borders and the temptation of countries to compete to be the more welcoming to
capital (read Luxembourg, Switzerland, Antigua and any tens of others.) But we can make a start....
It's Robert Putnam who connects the dots. What matters to our future, to restore the
American Dream, is equality of opportunity regardless of wealth and advantage of
access. As we know, America has become
more socio-economically rigid than any other developed, industrialized nation. Our storied upward mobility, the land of
opportunity, the Horatio Alger dream, has become just that -- a dream. The key to our vaunted exceptional-ism was that
social mobility; without that promise, America is no longer at all exceptional.
So where do
we start?
·
Constrain
capital accumulation. Repeal carried
interest treatment of capital gains. Tax
capital gains of under three years at ordinary income rates, with a decreasing
tax rate each year thereafter reaching zero after ten years . Decrease estate tax exemption to a $ million
or so and sharply increase progressivity of estate tax rates. Pressure recapture of trust funds moved into
tax havens, as we successfully have done with Swiss banks. Repeal tax deductibility of investment advice
and expenses.
·
Increase
education support and access. Fund
universal pre-school attendance and transportation. Increase earned income credits and provide
incentives for their use for paying pre-school and education expenses. Offer federal reimbursement for community
college certification. Increase block
grants to states for school investment -- facilities, teacher and faculty
support, tuition reduction -- whatever the state legislature chooses as their
priority. Campaign for property tax
equalization to reduce discrepancies between wealthy and less so districts. Provide
vouchers for education and nurture diverse school experiments -- magnet
schools, charter schools, whatever seems to promise productivity in learning. Nurture affordable housing, experiment with
housing vouchers, and disperse moderate and low income households among middle
class neighborhoods which value and support education. Support and promote mentoring and coaching
programs for promising low-income students.
Rainier Scholars is such a program here in Seattle, one which we support
and in which Ann is seeking a role. Restore
to the elementary curriculum arts, music and other programs that encourage self-expression
and self-discovery; these kids need more than just STIM.
Don't we
have other problems? Sure: unconstrained
corporate, union, not-for-profit, and individual money in politics; lobbying
and the Washington revolving door; the military-industrial-congressional
complex; infrastructure investment; incarceration; job training and
re-training; fair foreign trade; wage stagnation; ideological polarization; an unfair,
jury-rigged taxation system; and lots more.
But until we successfully open access to opportunity and constrain concentration
of wealth, our ability to address these problems will be stymied. Our society will continue becoming more and
more unequal, more and more rigid, more and more not the America of promise
that has so attracted the downtrodden of the world to come with their guts, ambition,
courage and determination to become Americans.
Call it
class warfare if you must engage in hyperbole.
I see it, rather, as addressing what Piketty calls the fundamental
contradiction in "...a market economy based on private property ...":
"powerful forces of convergence ... but also powerful forces of
divergence, which are potentially threatening to democratic societies and to
the values of social justice on which they are based." Constraints on capital and equal access for
all are the essential protections of a market economy based on private
property.
One of the
first books that drew me into this net of concerns about our Republic was Hedrick
Smith's Who Stole the American Dream? Rick has launched a web
site to encourage and energize us to get involved in addressing our challenges
and opportunities. Check out www.reclaimtheamericandream.org and begin pressing our
representatives to step onto what I think are the most promising paths:
constraining wealth accumulation and opening opportunity to all our kids.
These aren't
short term solutions. There are no short term solutions. But we can, together, bring the long term to
us. As Fareed Zacharia says, " Let's
get started."
