This article is dedicated to those of us that believe dialog and compromise are essential to our democratic decision-making. This is crucial as we face the interrelated crises of climate change, income inequality, racism, and COVID-19.
With climate change, damage and mitigation costs are highly non-linear. The more we wait, these costs become disproportionately higher. From a risk management perspective, you are familiar with: if you bet and act on climate improvement, the worse you will get is a healthier and cleaner world; betting and working against it, you risk a disaster. Besides, climate improvement represents an economic revolution. US industry needs to lead. Some sectors have begun to move, and already US solar electricity production has surpassed that of coal.
There has always been an uneven distribution of wealth and income, but we are getting to an extreme where we are going against our own (Republican and Democratic) interests. The top three US billionaires have more wealth than the bottom half of American families (Collins 2019). “Growth in income in recent decades has tilted to upper-income households. At the same time, the US middle class, which once comprised the clear majority of Americans, is shrinking. The share of American adults who live in middle-income households has decreased from 61% in 1971 to 51% in 2019” (Horowitz 2019). These middle and lower-income households need multiple jobs to make ends meet. They are stressed out and more susceptible to opioid abuse and obesity. US social mobility has been static since 1970 and is considerably below that of most developed nations. In the latest ranking, 26 other developed countries had higher social mobility than the US (WEF 2020). The American dreams of the Land of Opportunity and the Self-Made Man, also Republican dreams, are shattered for most of them.
We have a precarious, relatively poor, and unhealthy one-half of America. As this increasing comes become evident, together with the unresolved problem of racism, it casts doubt on the moral justice of the present economic setup. How can we support a system that does not live up to our own ideals?
The other problem is that such a weak and problematic one-half of the population will eventually bring about a lower and less stable level of consumption, which is the primary driver of the economy. Workers, such as those providing the essential services during the lockdown, should have a better opportunity of a decent livelihood, as in other advanced capitalistic countries. In Western Europe, the bottom 50 percent’s income share is 22 percent compared to 13 percent for the US in 2016 (UNESCO 2018).
The problem is systemic: we frequently avoid looking at the private-public interface and tradeoffs. And it is complex. However, you are not blinded; you see these relationships and know that something must be done.
And this type of critical examination constitutes the fundamental tradition of capitalism, which has been successful because it evolved. Through democracy we have corrected and compensated for many of our excesses: for example, with the Sherman Antitrust Act (1890), the Federal Trade Commission and Clayton Anti-Trust Acts (1914), the measures of the New Deal (Civilian Conservation Corps, the Civil Works Administration, the Farm Security Administration, the National Industrial Recovery Act of 1933 and the Social Security Administration), Fair Labor Standards Act (1938), the Occupational Safety and Health Administration (OSHA), the Environmental Protection Agency (EPA), and the Consumer Protection Agency (1971-1974), the American Recovery and Reinvestment Act of 2009, and the Dodd-Frank financial reform (2010). It is noteworthy that these reforms were often accompanied by private bailouts and economic stimulus measures.
As an expatriate, when I return to the States, I am increasingly shocked at the political acrimony and lack of dialog. We need to revitalize the nation, which is only possible in a bi-partisan way. I miss our old pragmatism when we came together and tried to solve our problems.
Collins, C, et al. Billionaire Bonanza 2018, October 30, 2019, Forbes.
Horowitz, J.M., Most Americans Say There Is Too Much Economic Inequality in the US, but Fewer Than Half Call It a Top Priority, Pew Research, January 9, 2020.
UNESCO, World Inequality Report 2018 Executive Summary, 2018.
WEF (World Economic Forum), The Global Social Mobility Report 2020 Equality, Opportunity and a New Economic Imperative, January 2020.