Umair Haque, today on the Harvard Business review blog, discusses the acceleration of massive, unsustainable transfers of wealth going on under the Obama administration, calling them ‘fatal vectors’:
- A transfer of wealth from Main Street to Wall Street. As Robert Reich has noted, the freeze disproportionately hurts Main Street. Wall Street got bailed out — and a spending freeze, now, is just another way of saying Main Street has to pay for it. In my last post, I referred to it as a War on the American Dream
- A transfer of wealth from young to old. America’s debt wasn’t racked up just last year, but over several decades. Its burden will fall disproportionately on tomorrow’s citizens. (That’s what my Generation M Manifesto was really about.)
- A transfer of wealth from human people to corporate “people.” America’s debt, in a very real sense, is a consequence of corporations evading their responsibilities as citizens, and failing to provide services that matter. If we had a working healthcare industry, for example, healthcare might not have to be so heavily subsidized. Instead, pharma players have booked huge profits for decades, while America’s racked up debt to essentially pay for it. (Connect the dots: one of the biggest components of the deficit is healthcare costs; healthcare costs so much, in part, because drugs are sold at significantly higher prices to Americans than abroad; higher drug prices yield nice margins for pharma players.) Today, it’s real people who carry corporate people on their shoulders — not vice versa.
Any one of those would create a sustainability problem. All three combined is a disaster waiting to happen.
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Dave – Question: Each of those bullet points is a long-term issue that predates Obama, yet your lead-in would indicate that these things are accelerating due to Obama’s policies. Wall St. was bailed out largely prior to Obama’s swearing in (except for the auto industry, which was just kicked down the road by the Bush admin), the second point makes clear that that is a long-term trend and the third has been exacerbated by Part D and attempted to be rectified by Obama (albeit miserably). So why lead in with unsustainable transfers of wealth going on under the Obama administration?
I indicated that the blog post discussed the acceleration, which I gathered from the author’s saying:
“And though it’s probably just PR shadowboxing, a “spending freeze” is actually perfect illustration of the big problem with Obama’s economic policy. So far, it has accelerated — instead of decelerated — three transfers of wealth:”
I would add that Republicans are “supposed” to be the greedy bastard, Wall Street lovin’, corporate bag men. Democrats are “supposed” the be the opposite. So an acceleration of the three trends under a Democratic supermajority & a Democratic President is noteworthy.
One would think that if he was going to say that these three transfers of wealth were accelerating, he would have some supporting documentation. Unfortunately, we just have to take him at his word.
Weak.
There’s plenty of evidence, and it’s not like the guy hacked into the Havard Business School blog.
Can you argue that those things aren’t accelerating? I would say they are, even if the third concept is a bit broad and hard to define.
Yes, I do challenge them. You may not agree with Keynsian theory, but there is some basis for where we are w.r.t. debt and our economic state. The numbers seem even worse when you take into account that GDP growth has taken a hit. Keynes would have us spending more.
But it is complete BS to start screaming about this now, while (a) we are pulling out of a recession and (b) we are coming off of an administration that thought nothing about ANY of these transfers. I know the standard reply is that you were screaming, but these trends were firmly in place in 2004, yet Bush skated.
Remember that the Bush administration did every one of these things under the guise of tax cuts for the wealthy and business. There were no tangible benefits to the nation, the economy or to our government from those cuts. Add to that, the BS of taking war spending off-budget, and you have a huge setup.
Oh, and you guys are still the corporate bagmen.
I see that you can argue the merits, but I don’t think the fact that those transfers are accelerating is in dispute.
hi there,
thx for the comments.
yes, these are long-run trends, decades in the making. the evidence is both obvious and vast. try stagnating middle class incomes, widening income inequality, or increasing financialization on for starters.
obama’s great challenge is decelerating them. instead, his economic policy is accelerating them. i’ve written at length what decelerating them might require – more, bigger, better stimulus, more and more meaningful reform, and a boatload of institutional innovation.
i think liberalgeek might be well-served by reading my original post, because he seems to have misunderstood it fundamentally.
cheers,
umair
Umair — Thanks a lot for stopping by to comment. It was a unique insight that stood out from the everyday back-and-forth. I must apologize that for some reason your comment got caught in my spam queue. Again, great of you to stop by.
Umair – Thanks for stopping by on this. Perhaps I am missing something in the original post.
Your suggestion that Obama policies are accelerating these issues is somewhat tortured. It seems to me that the transfers of wealth that have been accelerating for decades are indeed real. I do not see much in the way of institutional increases that will continue beyond the current economic crisis. The question I see is whether or not Obama should be decelerating them now. Dave has argued that stimulus spending and bailouts are counter-productive to recovery. You seem to state the opposite.
I think Dave and I agree with you on the need for reform, I suspect we disagree on the urgent places that it is needed.
I also think that the freeze is a promise for how we will behave after the crisis, as opposed to a cut in the short-term that would cripple a recovery. It says to investors that we will be on the straight-and-narrow as soon as we see the recovery upon us.
LG — Umair definitely is closer to your worldview than to mine. I think you may have snapped to judgment just based on his post being mentioned by me.
I think that poor Umair would be shocked SHOCKED! that you were using him to support your economic worldview.
No doubt. Good thing he didn’t stick around to read my other posts.
Exactly my thoughts.
I’m diabolical like that….
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