The Future of Democracy Newsletter: June 2020

​The focus of our June 1 discussion was Economics and Democracy. Readings including a section from Steve’s book Truth and Democracy, and The Triumph of Injustice by Emmanuel Saez and Gabriel Zucman. We included articles on whether the current economic situation will lead to a depression and the use of Mutual Aid Societies to enable those in need to get their needs met by alternative means.
 
From Truth and Democracy:

​Extreme inequality in a society impedes economic flow and negatively affects everyone. It has been repeatedly demonstrated that the closer we move toward prosperity for those at all economic levels, the greater the benefits for those at the top and bottom, as well as those in between. If too much money is concentrated in the hands of a few, the bulk of consumers who support businesses have less to spend. If we care to simply observe the truth of what works and what does not work in economies the record is clear. When those at all levels are included in a growing economy, it benefits everyone. When policies favor only those at the top, the eventual result is a general decline. (Page 63)

Because we have been brought up in a culture that teaches the importance of “getting ahead,” more and more people are getting further behind, with the rest in a continual state of fear about whether they have enough to sustain themselves and their families. But perhaps we should be wary of a state of mind that tells us that there never is enough, no matter how much we accumulate. As recent events make clear, with riots across our nation, there are many who consider themselves economically and socially disadvantaged. For our economy to remain viable, we must commit ourselves to creating a more just society with opportunities that equally benefit everyone.
 
The Triumph of Injustice is by Saez and Zucman, at UC Berkeley, who have collaborated with Thomas Piketty, author of Capital in the 21st Century which we discussed in the past, but the theme essentially is the same:

​Relentless self-interest destroys the norms of trust and cooperation at the heart of any prosperous society. Trump himself would be nothing without the infrastructure that connects his skyscrapers to the rest of the world, the sewer system that carries their waste, the teachers who taught his lawyers how to read, the doctors and public research that kept him healthy, let alone the laws and courts that protect his property. What makes communities thrive is not an unfettered free-for-all, it is cooperation and collective action. Even as their incomes boomed, as they reaped the rewards from globalization, and their wealth skyrocketed to previously unseen heights, the most fortunate Americans have seen their tax rates fall….The triumph of tax injustice is, above all, a denial of democracy. (Pages viii-x)

​These views are very much along the lines of the warnings of Robert Reich, who also works on the Berkeley campus, in his film Inequality for All (2013), but is based on updated research that shows inequality moving in an accelerated direction.
 
The solution that the authors suggest is moving back to the tax rate once considered normal before the massive cuts that began in the 1980s:

​The proper way to tax the wealthy in the 21st century to arrive at the optimal rate of 60% involves 3 ingredients: progressive income tax, a corporate tax and a wealth tax. (Page 145)

​From Sharon in our group:

The authors think wealth inequality can be addressed by creating a national income tax on all income, whether from labor or capital. It would not exempt saving. It would have a single rate with no deductions. It is not meant to replace the personal income tax or any other progressive tax. It is meant to supplement progressive taxation and to replace regressive taxes that impose an unfairly high burden on the working and middle classes, chief among which are private insurance premiums— the most regressive levy. This tax has not been proposed before because of international tax competition, since it does increase taxation of corporate profits. However if multinationals were taxed properly, tax competition would not be a concern.

We also briefly discussed mutual aid societies, which can take any form and have been in existence as long as people. They support individuals in meeting their common needs. We might consider families or their extensions mutual aid societies at the most basic level, or frontier organizations where neighbors help each other build homes, or membership organizations like credit unions. Lacking a vibrant monetary system, an alternative economy may work based on everyone contributing their efforts toward the common good.

The last article in our packet was “Crumbs for the Hungry but Windfalls for the Rich.” According to this article the bulk of the benefits of the current assistance programs are going to those who least need it, similarly to the government programs put in place during the 2008 Great Recession.

Our next meeting will be on July 6 at 7:45 p.m. Pacific Time (online). The topic will be How to Change the World, admittedly a broad emphasis, but our focus will be on how to move toward meaningful change in democracies to better serve the needs of all who live in them. We will consider some models used by governments and organizations to improve the lives of the people they serve. Of course the question we must consider is “would these techniques work here?” To join us contact Steve at thefutureofdemocracy.net.

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