Sunday, October 04, 2009

Hi Ho, American Capitalism.

Bernie Sanders is bang on the money here. No-one is arguing that capitalism doesn't do some things very well, but my problem is with the form of capitalism championed by Reagan and Thatcher, which insisted that taxation must be reduced for the very richest members of society in the hope that it would "trickle down" for the benefit of everyone else. It didn't.

During Reagan's tenure, income tax rates of the top personal tax bracket dropped from 70% to 28% in 7 years.
And the result of Reagan and Thatcher's form of capitalism has seen the gap between the rich and poor expand to almost Dickensian proportions.
New data from the CBO show that in 2006, the top 1% of households had a larger share of the nation’s after-tax income, and the middle and bottom fifths of households had smaller shares, than in any year since 1979, the first year the CBO data cover. As a result, the gaps in after-tax incomes between households in the top 1% and those in the middle and bottom fifths were the widest on record.
It used to be that Company Chairmen earned 30 or 40 times the wage of their workers, now they can earn up to 400 times as much. I can see why the beneficiaries of this system think it's a great idea, but I must admit I am always staggered to see people like the tea party protesters and other ordinary working and middle class citizens protesting for the rights of other people to earn 400 times as much as they do. That strikes me as perverse.

And it's interesting, whilst listening to Sanders talk about the European models, to realise that the nations which do accept that they have a responsibility towards their citizens health and education produce the happiest citizens on the planet.
Denmark and five other European countries, including Switzerland, Austria, and Iceland, came out in the top 10, while Zimbabwe and Burundi pulled up the bottom.

Not surprisingly, the countries that are happiest are those that are healthy, wealthy, and wise. "The most significant factors were health, the level of poverty, and access to basic education," White says. Population size also plays a role. Smaller countries with greater social cohesion and a stronger sense of national identity tended to score better, while those with the largest populations fared worse. China came in No. 82, India ranked 125, and Russia was 167. The U.S. came in at 23.

Reagan and Thatcher's capitalism takes no account of happiness, instead preferring to concentrate on an individuals right to create wealth, rather than on the quality of life which all of their nation's citizens enjoy.

It is, as Sanders rightly identifies it here, “an unfettered, cowboy-type capitalism” which denies collective rights - with Thatcher famously going so far as to state, "There is no such thing as society" - and implying that you are, for the most part, on your own.

It might make some people very rich, but it's not very good at making people happy.

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