Wednesday, February 29, 2012

Rip Van Winkling Us To Death

In Washington Irving's 19th Century tale, a colonial villager of Dutch descent by the name of Rip Van Winkle wanders up into the mountains of New York with his dog and his gun and comes upon some men of odd appearance playing ninepins. He drinks some of their liquor and falls asleep. When he wakes up, his dog is nowhere to be seen, his gun is rusted, his joints are stiff and his clothes ragged, and his beard has grown a foot or more.

When he returns to his village, Rip recognizes no one. His wife has died and his close friends have either been killed in a war or moved on. Villagers are calling another much younger man by his name, and it dawns on Rip that this man is his son and he must have slept for 20 years.

Rip resumes his life of idleness and takes up his old habits, having had the luxury of sleeping through the hardships of a revolutionary war.

Today's state and national politics are full of Rip Van Winkles, except they've been asleep for 30 years or more and are still dozing. If and when they wake, perhaps it'll dawn on them we have been through an economic revolution.

When they nodded off, there were national economies and even local economies, marked by mutual dependence. Businesses needed local communities as much as those communities needed them. Now we have a global economy and mutual dependence is long gone.

Neenah and Janesville and Wausau still need businesses, but businesses aiming to compete in the global marketplace don't need Neenah and Janesville and Wausau so much anymore. They can locate their operations virtually anywhere in the world, and they can find markets to sell what they produce virtually anywhere in the world. And they have. They've outsourced and offshored with reckless abandon, all while Rip Van Winkle sleeps.

You can cut their taxes to zero, you can bribe them with public subsidies, and they can still find a cheaper and thus more profitable place to do business somewhere else. A new economic truth has emerged: In a global economy, local communities or states or even entire nations have little or no control over material capital. Human capital is the only thing subject to local control.

Despite this new reality, with Rip Van Winkle still sleeping, scarce public resources are thrown at things, and public investments in people are starved. The building of a factory is subsidized here or there, and so is the profitability of the thing (corporations are not people, my friends) running the factory. But the factory is so roboticized that precious few jobs can be had working there. And despite the subsidies, it remains cheaper to do business elsewhere and it's only a matter of time before the company packs up and searches for some greener pasture.

As Rip Van Winkle sleeps, hundreds of millions of dollars in state aid to local schools are cut. Vocational and technical colleges are where tomorrow's workers will get the skills they need to compete in the global economy, and the state cuts their funds by 30%. Universities are where tomorrow's entrepreneurs and business enterprises are born, and the state cuts them too.

When Rip drifted off some three decades ago, our society was embarking on an economic experiment. Some called it supply side theory. Others called it trickle down economics. Its effects have been disastrous. After the country grew together for three decades from the end of World War II to the mid-1970s – with every income class gaining ground – the country has grown apart in the last 30-plus years since supply-side policies were put in place. Only the top 10% has gained ground, and the top 1%'s share of the pie has grown wildly. Everyone else is either treading water or sinking.

The rich have been made richer, the poor have been made poorer, and the middle class is disappearing. But while Rip snoozes, the wealthy continue to get more handouts and the middle class edges closer to extinction. Nobody seems to notice another economic truth that has become self evident: Economic growth is driven by demand, not supply. You can build a factory, but if no one has the money to buy what is made there, it will be shuttered in no time. If, on the other hand, people have money in their pockets and are in a mood to spend, any self-respecting capitalist will find a way to create a supply to meet that demand. They don't need a tax break or an interest-free forgiveable loan. What they need is a marketplace full of demand.

As the 1% prosper beyond anyone's wildest imagination at the expense of most everyone else, it's hard not to notice that campaign contributions to today's politicians come from no more than 1% of the population. The money game in modern politics was not born two years ago when the U.S. Supreme Court issued its infamous decision in the Citizens United case allowing unlimited corporate election spending. It was born more than three decades ago when the high court rendered an equally boneheaded ruling in Buckley v. Valeo that money is speech.

Both major parties bought into this dubious doctrine. Now all these years later, with citizens convinced that politicians are bought and our government is owned by wealthy interests, Rip Van Winkle is now just beginning to stir. But it looks like Rip is likely to resume his life of idleness and take up his old habits, having had the luxury of sleeping through the raping and pillaging of American democracy.

Republican Van Winkles are putting the money game on steroids. Democratic Van Winkles are wringing their hands. So far, the best they've been able to come up with is what they consider a better way to buy politicians. People are heartsick about the 1%'s grip on our politics, and Rip's answer is to let big donors make even bigger donations to politicians and political parties.

1 comment:

Anonymous said...

Super articule.