Tuesday, Jan 5, 2010, 8:06 am
Weekly Audit: Getting it Right in 2010
The new decade offers a great opportunity to not only look back on the policies that led to our current economic malaise, but consider other ways of building stability that won't wreak economic and ecological destruction.
Here's a quick round up of some smart articles that address how economic policy changes could shift the way we work and live in the next decade.
The Washington Monthly's Steve Benen reminds us that while boom-and-bust cycles are nothing new in the realm of economics, the last decade's boom-and-bust marks the only cycle since the 1940s that resulted in zero total job creation. Usually, even after the bust, the economy has more jobs than it had before the boom. Benen looks at the current cycle and argues that conservative economic policy just doesn't work. He highlights a Washington Post article that looks back on a lost decade for the labor market as proof. Deregulation and tax cuts for wealthy individuals and corporations were very good for the rich. For the rest of us, not so much. But even after inciting the worst recession since the Great Depression, this destructive ideology isn't going away. Benen writes:
"Those policies failed spectacularly—but the discredited agenda nevertheless remains the foundation of the Republican economic philosophy in the new decade."
The conservative assault on the estate tax is perhaps the most egregious of these dysfunctional trickle-down tax policies, as Brian Miller highlights for the American Forum. When wealthy people die, the government taxes the inheritance money their heirs receive. But the Bush tax cuts approved in 2001 dramatically limited how much the government could tax, and scheduled a full repeal of the tax for 2010. When Congress failed to block the repeal last year, this year's estate tax disappeared—along with revenue that funds important social projects. Fortunately, the estate tax is scheduled to go back into effect next year, but there's no excuse for letting it lapse in 2010.
Congress has the legal authority to impose retroactive taxes and needs to exercise that power to prevent the loss of this year's estate tax revenue. Any so-called fiscal conservative wringing his or her hands over the economic stimulus package has no business sending federal windfalls to the children of wealthy parents. And a strong estate tax isn't just about the budget, it's also a critical issue of fairness.
"The estate tax is fundamentally about recycling opportunity," Miller writes. "Like the farmer who tills under leftover crops at the end of the season, the estate tax helps promote fertile fields of opportunity for the next generation to build upon. It's about giving each generation a fresh start and a chance at achieving the American dream through their own merit."
Beyond tax policy, it's time to acknowledge that unsupervised markets don't result in free market prosperity, but reckless, free-for-all excess. Many have forgotten the great pet food recall of 2007, in which a supplier called Menu Foods was literally stocking its pet foods with poison. But as Barry C. Lynn emphasizes for AlterNet, the most damaging aspect of the problem was that Menu Foods didn't simply operate its own retail brand. Instead, the company serves as monopolistic middleman, packaging pet food that is sold under dozens of different brands, from higher-end names like Iams and Hill's Pet Nutrition Science to store brands at Kroger's, Safeway, and Wal-Mart. This diverse marketing created an illusion of consumer choice that allowed a single company to build an empire insulated from competitive pressures like quality control.
As a result, problems at a single company most consumers had never heard of created a mass-recall. And these same hidden monopolies exist in dozens of other industries, from toothpaste to beer. Refusing to break up these monopolies is economically irresponsible, Lynn argues, because it defangs the market's power to root out socially destructive behavior:
"Our political economy is filled with hidden monopolies almost everywhere, and these monopolies increasingly control, restrict, and determine what we buy, with little or no regard for any real market forces."
Sick of busting your butt five days a week for a measly two-day respite? At Working In These Times, Michelle Chen highlights the effects of a four-day work-week on state employees in Utah to show how a shorter work week can lead to more productivity and more satisfying lives for employees. The idea is simple: Instead of working five eight-hour days, workers take on four 10-hour shifts. So far, Utah has seen better results from its employees and the workers have more days to enjoy the activities they love.
As several governments, including the U.S., stall on climate change, some entrepreneurs are looking to new types of financial markets to bolster environmental conservation efforts. In Mother Jones, Hillary Rosner highlights a program being pushed in Malaysia's Sabah state that rewards private companies for spending money to protect the region's rainforest. Under the plan, companies that profited from exploiting the rainforest would purchase "biodiversity conservation certificates" that pay for the preservation and policing of existing rainforest. In return, the companies get certified as an environmentally friendly organization and enjoy the resulting marketing benefits, plus a share of profits from ecotourism.
While this is a creative approach to the economics of environmentalism, there is plenty of room for skepticism. What happens if the rainforest becomes a gambling token in a new eco-casino? After all, dividing up the planet into pieces that can be exploited for economic gain is exactly what got us into the current climate conundrum in the first place.
Lots of other economic policy changes are on the horizon. Federal Reserve Chairman Ben Bernanke comes up for his confirmation vote in the Senate this month after facing higher-than-usual opposition in the Senate Banking Committee. Many progressives and conservatives are upset about Bernanke's failure to crack down on predatory mortgage lending during the housing bubble and several of the Fed's crisis-management programs have been heavily criticized, particularly the bailout of AIG. Also be on the lookout for movement around the Senate on a jobs bill. A $154 billion package passed the House in December, and with unemployment at 10%, the labor market needs all the help it can get from Capitol Hill.
Finally, Senate Banking Committee Chairman Chris Dodd (D-CT) and ranking Republican Richard Shelby of Alabama said last month that they were close to agreement on a new financial regulation bill, which will likely strip the Federal Reserve of the regulatory authority it refused to wield over the past decade and give it to a new agency. It's about time.
This post features links to the best independent, progressive reporting about the economy by members of The Media Consortium. It is free to reprint. Visit the Audit for a complete list of articles on economic issues, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Mulch, The Pulse and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.