Technology has changed the power dynamic between capital and labor. When you can be automated out of existence, you really don’t have much bargaining power.
No technology had ever reduced the total number of jobs, and the new jobs created always paid more than those destroyed, until the ’80s. This is because the people generally had confidence in their government to legislate to their best interests, and their elected representatives did their best to do so. Reagan brought a new dynamic into the mix when he declared “Government IS the problem” and gained the army of watchdogs now standing guard at every checkout to police the spending of those “not deserving” in the belief that “their” tax dollars were being misspent.
This view was only partly true when we functioned with a gold standard and taxation created “policy room” for Congress to spend, but is now totally in error. This was acknowledged in a white paper by a former chairman of the New York Federal Reserve, Beardsley Rummel, as early as ’45 after we left the gold standard domestically in ’34. We completely decoupled spending and taxation, except as inflation control, in ’71 when Nixon removed us from the Bretton-Woods treaty and the gold standard completely.
This also redefined deficits at the federal level and made the national debt nothing more than a record of currency created into the private sector but not yet used to pay a federal tax obligation. Since prudent investment takes advantage of now all but useless Treasury bonds the appearance of debt is supported by interest payments, but the spending, by necessity, took place before a bond is issued.
The government simply cannot function to fund economic growth or mitigate the damage done by technology as long as it is seen as the enemy and anything it does as wasteful. This dystopian view is now dominating our government’s fiscal and monetary policy, making it impossible to use Congress’ Constitutional power to create currency as it is mandated to do “for the general welfare”. No malfunction will ever be remedied if those causing, and profiting from, the malfunction is solely expected to do so. Capitalism will fail completely before any attempt is made at remedying what it caused, and the only power able to intervene prior is the “people’s” government.
With a currency that is a no-cost commodity to Congress, in spite of conservative rhetoric of doom and gloom attending any benefit to the people, any misery in this economy is strictly a political choice, not economics. Congress, as the monopoly issuer of the currency, can “afford” anything physically available and priced in dollars without incurring inflation, including the excess labor the private sector refuses. We will not reach our economic potential until our government accepts responsibility for the welfare of the people and becomes the employer of last resort, as it was during FDR’s New Deal.
Doing so would provide a floor for wages and benefits that the private sector would have to bid against and would be countercyclical to the natural business cycles to prevent a domino-like collapse of critical supply chains better than the current safety net can. It could serve to retrain displaced workers and provide communities with labor to repair decades of damage done by capitalism. It would also be much harder to whittle away, as only lowering the wage would do so. I think it is time for such measures, as the sociopathic oligarchs have shown us who the real enemies of the people are, and it isn’t our government.
We should be taxing the bejebus out of the wealthy sociopaths, but not with the intention of “funding” anything. They, and we, need to understand that they are being taxed because they are dysfunctional personalities and do mischief with their money that harms society, perhaps more than many of the criminals we incarcerate at embarrassing levels to provide the oligarchs with income even from our misery.
