A New Social Contract is Required

July 4, 2017, from Da Lat, Vietnam

It’s time for a new social contract for the United States of America.  If there is a “contract” of any sort now (implied), it has steadily gravitated over 30 years to the advantage of business and the wealthy. The working class has been abandoned in the pursuit of extreme capitalism.

Consider some of the evidence:

  • Inequality has risen since 1970 to the levels of the Robber Baron era of the 1920s.
  • Millions of manufacturing jobs have been eliminated by technology and globalization, and what work that remains is at much less pay and is less satisfying.
  • While stock market values have advanced to the benefit of those who own stock, corporations have not improved the  lives of their workers. Only precarious or “gig” jobs abound.
  • Poverty in America is about the same as it was in 1970, as a percentage of families. 40 million live in poverty.
  • While we never had health care for everyone, Republicans are threatening to make it unavailable to 22 million more people.
  • Millions of dissatisfied have moved to extremes of opposition to government, and we elected a Populist candidate with little agenda to address this problem.

Notwithstanding this evidence (and much more), Conservatives seem hell-bent on continuing to cater to the wealthy. The single focus is on growth and business, with the implication that if we attend to the best interests of business and economic growth, the rest will take care of itself: Magically, there will be an abundance of good jobs, regardless of our failure to address structural obstacles like globalization and technology. And, regardless of our failures in maintaining global educational excellence, much less advancing it to deal with the new challenges of the knowledge economy. It’s impossible to tell who really believes single focus on business and economic growth is adequate. Some who profess this are simply in deep denial, and don’t see the facts of the last 30 years. The rest know this doesn’t work, except for the wealthy, but they see it seems to sell well to the working class–for a while longer.

Conservatives place emphasis on an American myth–the mobility of “Horatio Alger” America. Here is Paul Ryan: ” A lot of people don’t believe in the American idea anymore. The condition of your birth doesn’t determine the outcome of your life. This is America. You can make it.” Paul, there’s a reason a lot of people don’t believe in that particular American idea anymore. It’s no longer true. Raj Chetty and associates have studied the likelihood of a child earning more than his father, and found that the chances were 90% for children from the 1940s, but have fallen to only 50% for children born in 1980s. It’s worse in low income communities.

We cannot simply continue to cross our fingers on the basis of hoped for growth and increased prosperity for business. Uncontrolled capitalism must be accepted as having little interest in the worker. Workers are only protected to the extent they are critical to production and sales. This is capitalism. Shareholders are the only real constituency.

We don’t seek to change the essence of capitalism. Fortunately, we have another party to help with the rest. Government. No one wants onerous controls or excessive regulation, but someone must assure that the long term benefit to the society of supporting businesses extends to the citizens, the workers, and and their communities. Is there any evidence across our centuries of capitalism that left completely on their own, corporations will undertake to assure that there is shared prosperity across our land? No criticism, they’re not designed for that. Government is the referee and must do its job. Can anyone imagine a football game without referees to limit excessive competition?

We need a new social contract–one in which there is a primary objective of shared prosperity. Government must work with businesses and communities to support efforts in which opportunities are spread and shared. Competition will continue, but there must be incentives for sharing technology, information, and even property rights, such that a groundswell of innovation and new business creation can occur. Businesses will be incented to make greater investments in education and in communities where they work and sell. If we prevail in this objective, growth will be strong and our country will recover its vitality and its character.

Only with this new social contract can we make America great again.


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