Prosperity for sale

The Narrow View: Bush's Prosperity for the Few
by Rockridge
Fri Mar 09, 2007 at 04:41:04 PM PST
Under the policies of the Bush administration, income gains in our economy enrich military contractors in the Washington, D.C. beltway disproportionately. These policies fail to advance a goal of broad prosperity, which would ensure that all Americans have a fair opportunity to prosper.

A new column by economist James K. Galbraith provides important insights into the sources of income inequality, among people and especially across geographic areas. His insights can help us to recognize why broad prosperity matters, and what we can do to achieve it.

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What Produces Income Inequality
In his Mother Jones column, "Bush's Beltway Boom," James K. Galbraith examines what has been producing income inequality in the United States:
"[I]ncome inequality in the United States has been driven by capital gains and stock options, mostly in the tech sector. This is what separates that mysterious top .01 of 1 percent from the rest of us: They're the people who run Google, Oracle, and eBay."
Galbraith observes that this explains income inequality among regions as well as among people:
"County data confirm this: The big income winners in the late 1990s were concentrated in just four countiesâ??Santa Clara, San Francisco, and San Mateo in California (all in the environs of Silicon Valley), and King County in Washington (Microsoft)â??as well as in Manhattan, the home of the bankers who made it happen."
Galbraith's analysis finds that while income inequality grew during the technology boom that Clinton era policies encouraged, there was also "nearly full employment, rising wages and productivity, and little inflation."
The collapse of the technology boom at the start of the current decade reduced this source of inequality, but Galbraith reveals that Bush administration's policies have disproportionately produced income gains in the Washington, D.C. area:
"In fact, there was one group of counties that did exceptionally well in the first four Bush years. Guess what? They're concentrated around Washington, D.C. Of the top 10 gainers from 2000 to 2004, three are Washington neighbors (Fairfax, Montgomery, and Baltimore), and one is D.C. itself. Among the top 35 gainers, there are five more counties in the immediate vicinity. Conversely, none of the top 50 losers are near the capital."
(This does not mean that the average resident of Washington, D.C. or Baltimore is benefiting. Within these areas, there is an inequality among income gains as well.)
Galbraith finds that two major economic policies characterize the Bush era. The first is encouraging "a vast housing boom, now deflating" through tax cuts favoring the wealthy and lower interest rates. The second was to increase government spending, particularly military spending, which greatly enriched military contractors and consultants based in the Washington, D.C. area, which "was the only major geographic center to show concentrated gains" in the Bush years. This means that our common wealth is being diverted to military contractors.
Why Broad Prosperity Matters
Conservatives might conclude that the effects that Galbraith describes are just the market at work, and nothing to fret about. If people are disciplined and choose wisely (by working as a mortgage broker during the housing boom or for a military contractor during the "War on Terror"), they will prosper. It's just up to individuals to pursue the opportunities that the market provides.

In Chapter 8 of George Lakoff's Don't Think of an Elephant!, we can recognize why broad prosperity, rather than merely individual opportunity, should be our goal. Let's see how the concept of broad prosperity emerges from our values and principles. First, note the connections between the values freedom, opportunity, and prosperity:

"There is no fulfillment without freedom, no freedom without opportunity, and no opportunity without prosperity."

If we share any of these values, then we should seek a prosperity of which all can partake. (As Rockridge guest scholar Delwin Brown notes, this understanding has deep roots in religious traditions as well.) This is why we would not be content with an extreme case in which the average income of a society rises, but most of its people toil in dire poverty while a few wealthy families grow richer.

These values lead to an important progressive principle, equity:

"If you work hard; play by the rules; and serve your family, community, and nation, then the nation should provide a decent standard of living, as well as freedom, security, and opportunity."

Most Americans surely share this understanding, which is fundamentally at odds with the views of conservative market idolaters, who argue, for instance, that the minimum wage should be zero.

Continuing from Chapter 8 of Elephant!, the principle of equity then leads us to the concept of broad prosperity:

"An economy centered on innovation that creates millions of good-paying jobs and provides every American with a fair opportunity to prosper."

Broad prosperity also recognizes that markets are "constructed for someone's benefit." They are the products of the laws of people, not nature. As such, we can and should choose to ensure that they are constructed to serve the broadest possible prosperity.


How We Can Work for Broad Prosperity


The selective benefits of prosperity that Galbraith found in the technology boom, the housing boom, and the military buildup, were the results of political policies that shaped markets. We have the power to encourage policies that shape markets to broaden prosperity.

The following are three strategic initiatives that would advance the goal of broad prosperity as well as other progressive goals:

Clean Energy - Investing our common wealth to spur the development and efficient use of renewable energy, as the Apollo Alliance has envisioned, would contribute greatly to broad prosperity, creating jobs in the production of new technologies and in the improvement of our infrastructure. It is also consistent with Galbraith's conclusion that we should invest in ways to avert the climate crisis.

Healthy Food - Instead of providing massive subsidies to industrial agriculture, we can choose to invest in local, sustainable farming that reduces dependence on toxic pesticides and herbicides. In addition to the clear benefits to public health and the environment, this would also broaden prosperity by increasing the viability of small-scale farms. More about the Healthy Foods Initiative can be found in Chapter Seven ofThinking Points. Other benefits that our society could derive by replacing industrial agriculture with small-scale organic farming are outlined in an article published today at Common Dreams.

Transit-For-All - Building "clean, convenient, reliable, and accessible webs of transportation," as the Rockridge Institute has proposed in Chapter Sever of Thinking Points, is a use of our public resources that could create many jobs, including union jobs with the benefits and protections that they provide. Greater mobility would also lead to neighborhood revitalization and an expansion of freedom for many Americans. Reducing greenhouse gas emissions would be yet another important benefit.
All of these initiatives would create large numbers of jobs that could strengthen families and communities and could not be outsourced to foreign countries.

As Galbraith has shown us, the policies our leaders' pursue have a profound effect on who receives the fruits of our economic growth. Few Americans are content with an administration that showers the wealthiest Americans with tax cuts, while funneling ever more of our nation's wealth to well-connected government contractors. It is time for us make broad prosperity a hallmark of our economy and society, and we must build coalitions and elect leaders that share this vision.