Yes, Virginia. There Are Economic Realities (Krugman and the SCOTUS)

January 31st, 2011

Nobel prize-winning economist Professor Paul Krugman wrote his opinion of where the President might take the theme of his State of the Union address. The theme of concern was “competitiveness”. The column was of particular interest to me because my entire life was disrupted by a myth that we practiced capitalism in this country even as goods and services here were entirely similar in composition, quality and consumer ignorance regarding their contents.

Economics, misunderstood, can kill. Boring as you may think it, economics is the stuff which dictates whether or not YOU become a manager of employees or merely their overseer; whether a skilled worker will be sought out by employers to better their quality of production or merely another disposable commodity to be picked off the shelves for an indeterminate period of employment. It’s about whether or not there is a penalty to be paid in reduced sales for risking the lives of your workers or customers. Unfortunately we are told by all concerned that we don’t need to know product ingredients or how to diagnose related ailments. Since product bans aren’t permitted under NAFTA rules anyway, there is no penalty to be paid by disgruntled consumers. The number one premise of capitalism is that the rewards go to he who builds a better mousetrap. Instead, the reward goes to he who can buy out the better mousetrap company and then discard the product in favor of inferior commodities with higher profit margins. There won’t be much in the way of competition and if other companies spring up, trade associations can ensure no one leads the pack in innovation leaving the others behind.

It is easy to throw around the concept of an either/or system of economics—everything that isn’t capitalism is socialism. We haven’t progressed very far since McCarthy was our King and the worst epithet of the 1950’s was the term, ‘communist’. We’ve recently adopted ‘socialism’ as our buzz work for today, labeling everything and everything that might be considered a right or necessity for life to be a commodity for sale to the fiscally solvent. Would you charge someone for air necessary to breathing? Then why penalize them for needing additional oxygen if they lack healthcare coverage? Do you object to controls upon air pollution? The cost of reducing it to ‘safer’ levels is actually socialism at work as taxes are directed to making the air breathable and the water, potable.

Unless you believe in the ‘polluter pays’ policy, being zealously opposed by industry when congress considers the huge savings obtained through such a policy.

Avoiding the label of socialism is more important to everyone than determining the best label for a product or service. Is it a commodity or a necessity? Do you want heart attack victims being turned away from the ER door for lack of insurance? If not, then health care is a right and not a commodity. Hence, it is exempt at some basic level from being unobtainable to anyone. There will always be premium levels of goods and services for the well-heeled but that doesn’t mean everyone in society doesn’t benefit from healthy neighbors and productive workers. This is why property taxes of individuals without children go to pay the costs of educating all children.

It’s a case of ‘Sticks and stones may break YOUR bones but I will not let others call me a socialist!”. Peer pressure and semantics shouldn’t constitute a moral basis for depriving any citizen of antibiotics for pneumonia or blood pressure medicine for the elderly. True, people are deprived of life for heinous criminal actions in places practicing capital punishment. Is poverty among those listed as capital crimes?

Another ‘label’ war is the misuse of the ‘free market’ term. Who can object to anything with the word ‘free’ attached to it (well, other than healthcare)? Yet it is the antithesis to capitalism which allows consumers to determine ‘the winner and champion’, rather than who can borrow the most money and crush other vendors of similar products until you have a monopoly on that market. Any big dog can best a smaller one. Anti-trust laws, long ignored, were put into effect to restrict such abuses and protect small businesses. Socialism? Perhaps but it’s about evolving a society to match its vision for itself regardless of the label. It ensures competition lives.

Government will never be irrelevant to business. Particularly when we learn that businesses sometimes lie to us. Would you believe Monsanto if they said Round Up herbicide was a safe poison? Hopefully not because the courts in France, and in our own state of New York, examined those claims and found them false. The fines were paid and business not much disrupted. But it should have been. Maya Angelou said “”The first time someone shows you who they are, believe them.”

Krugman graded the speech here, unimpressed with the lack of specifics but then the President wasn’t addressing a classroom of Princeton students studying the economy. Still, the statements made about competitiveness were referencing the kind which takes the form of individual achievement and flexibility, in an age of changing employment patterns and reduced scholastic accomplishments by our young people. The President did not equate business with ‘free markets’ and went as far as noting that Big Oil could afford to do quite nicely without government subsidies.

It’s a beginning.

My comment:

HIGHLIGHT (what’s this?)
Barbara Rubin
January 24th, 2011
11:06 am

Forgive my economic naivete, but it would appear that ‘competitiveness’ is effectively being quashed by industry itself. The monopolization of major industries by transnational corporations appears to view the world as a single trough from which only their approved subsidiaries can feed. Trade associations agree to offer inferior products of a uniform nature to the public at prices set for declining levels of income. Falling wages are arranged by the same groups which serve as major employers around the world. If true competitiveness were the goal, wages would reflect the desire for consumers to have more disposable income.

Until farmers can re-use seeds and their own crops (potatoes are grown from potatoes), they aren’t able to compete with one another. Their revenues are always going to belong largely to the vendor of those seeds and attendant technologies required to bring them to ‘fruition’ in chemically laden fields. Feudalism lives in modern times.

As agribusiness and energy cartels dictate changes to our very eco-system, other industries deal with that ‘fall-out’. Developers are dealing with contaminated lands and diminishing supplies of clean water. Building trades are dependent upon inexpensive toxic construction materials from the US and China to house increasingly impoverished populations with low budgets for housing units. These materials can’t be exported to Europe where they’ve learned the costs of ignoring safety (largely through providing universal health care).

Clothing manufacturers, producers of processed foods – what industry can actually boast a large array of competitive businesses falling under these major umbrellas? Competition lies in who can pay the least to workers, offer the fewest benefits and substitute cost-saving chemical treatments to make products look shiny. Worker benefits are provided by the public in medicaid and housing vouchers for working families! Low ‘competitive’ prices of toxic goods and services are made up with costs paid in physician offices and tax funded disability insurance.

I hope President Obama speaks to competitiveness among ‘modest’ businesses which will benefit from employing local residents. Seeing that transnational corporations pay taxes in every nation offering them markets is a start. Ending NAFTA requirements that nations pay companies for losses of profits, if harmful products are banned, is another way to end the stranglehold of monopolies ready to sue nations for such reasonable measures.

Competitiveness lies with dreams of earning a mere million in profits rather than billions. Companies used to compete to achieve sustainability of their operations for future generations. Now a golden parachute rewards those aiming to make a ‘quick killing’ and get out while they can do so.

Quick killing indeed. The cemeteries are filling up quite nicely.

Barbara Rubin
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