Thursday IPE Bookshelf: Reagan Official and Liberal Economist Agree; Crony Capitalism is Destroying America From Within
Today for our IPE Section in the TFS Bookstore, I’ve reviewed two outstanding and informative books that the health of our economy and democracy. The authors of these books come two totally different sides of the political spectrum, but both have many of the same conclusions- America’s economy is in peril and being looted, democracy is eroding and it wealth, concentrated at the very top of the socioeconomic ladder is stifling any dynamic growth in our society and economy. Both conclude that America’s warped, unadulterated, and under regulated capitalist system coupled with a broken political system puts America’s long term future in serious jeopardy- unless we start the discussion and planning for an economic and political revival that the working people of this state and country, so desperately need, and so richly deserve. One of the author, Joseph Stiglitz is a liberal Nobel Laureate and Economist, the other, David Stockman was President Ronald Reagan’s Budget Director and one of the architects of the Reagan Revolution.
The first entry in the TFS Bookstore’s IPE Section today , is “The Price of Inequality” from US Nobel Laureate in Economics, Joseph Stiglitz. It argues that America’s economy has snowballed into one with the worst inequality and least of equal opportunities for all of its citizens. Stiglitz also discusses how the efforts of those at the top of economic ladder, have not only halted social mobility for the lower classes. but also by compounding their wealth in such ways, the highest echelons of society, have stifled any inkling of dynamic capitalism that once defined the American way of life. Where both of the books take a major turn and really where Stiglitz is different among other center-left economists, is the point where you’ll be hooked to it – Many economists and pundits alike have been pointing to a future that is essential lost due to unstoppable forces- globalization, automation, bursting bubbles, and the economic collapse of 2008. Stiglitz and many other thinkers are now focusing their attentions on the true culprit of America’s economic and social downturn: the exercise of political power by those at the very top of the socio-economic ladder over the legislative and regulatory processes where the ending the results is favorable tax policy,market share protections, and what the academic and economics circles call “rent seeking.”
During my time at Stetson University, I read much of Stiglitz’s work in my IPE Class. As I previously mentioned, Stiglitz is part of a larger group of thinkers that are challenging the older thinking in economics. A New York Times Review of this book, includes: Jacob S. Hacker and Paul Pierson (the authors of “Winner-Take-All Politics: How Washington Made the Rich Richer — and Turned Its Back on the Middle Class”); Lawrence Lessig (“Republic, Lost: How Money Corrupts Congress — and a Plan to Stop It”); Timothy Noah (“The Great Divergence: America’s Growing Inequality Crisis and What We Can Do About It”) and Paul Krugman (“End This Depression Now!”) as the other members of this a new academic insurgency. From the piece:
The collective argument of these dissidents is not only that inequality violates moral values, but that it also interacts with a money-driven political system to grant excessive power to the most affluent. In short, those with power use it to insulate themselves from competitive forces by winning favorable tax treatment, government-protected market share and other forms of what economists call “rent seeking.”
Over time, I’ll continue to add more and more of Stiglitz’s (and partners’) works in the IPE section for your review. All of them are must reads, many of which I have tweeted and/or linked to on my Facebook page in the past as well. I’ll also find ways to put some of his academic works that I have in PDF form here as well if permitted to do so.
The second addition to our bookstore, from former President Ronald Reagan’s budget director David Stockman, “The Great Deformation” is a lengthier and wonkier read at a gaudy 719 pages, however it will certainly frustrate both Democrats and Republicans, thus it certainly belongs in the TFS Bookstore. The book is written in such a tone, that it will never bore you as you can tell that Stockman is quite angry at the stagnation in our economy. Stockman, addressed five myths about the economy: ranging from what caused the 2008 financial crisis, to the legacy of the “Reagan Revolution, to a discussion of the gold standard, the Great Depression and Conservative Economist Milton Friedman.
Stockman takes Roosevelt and the left’s Keynesians to the woodshed over the idea of spending to prosperity however, acknowledges that the top one percent of live the life of luxury on the backs of the lower classes. This is the point in the book, where the parallels with liberal counterpart Joseph Stiglitz are quite apparent. Throughout the entire book, Stockman explain thoroughly that this is NOT the result of free market capitalism, like Marx and Piketty have argued, but by that of the growth of crony capitalism, regardless of the ruling power- that corporate welfare and taxation policy must be addressed in addition to campaign finance reform to get big money and one percent influence out of politics.
Part two of the book, absolutely demolishes today’s Republican Party and supply side economics, that later became the legacy of Ronald Reagan. Stockman reminds the reader that the Troubled Asset Relief Program (TARP), was a useless bailout of Wall Street bank started by the George W. Bush Administration and was “a repudiation of the Reagan Revolution” that has become such a staple of the GOP’s press shops and propaganda today. He tells us”
Government Spending during the second Bush Administration dwarfed all prior episodes of profligacy as the public debt tripled and federal red ink amounted to nearly seventy percent of GDP growth.
He goes on and tells us that the Reagan’s biggest mistake as President was appointed Alan Greenspan as Fed Chairman which lead the replacing of real income and productivity with bubble finance and voodoo economics. He adds that the defense build up even after the Cold War began its demise, gave future Presidents an armory of equipment to launch needless wars.
As you can see, both of these books provide intuitive and thought provoking insight into or political economy and thus are perfect additions of to our IPE Section. They both explain to us that the top one percent of earners are using that political power to hold back of our once roaring economy from achieving its utmost potentially- and economy fit for the future, where we all have equality opportunity at social mobility.
I hope you’ll pick up both works. And as always, thanks for reading.
- Posted in: Economy