top of page
  • The Scrivener

Opinion: A LOST ARGUMENT REVISITED.

Updated: Aug 12, 2023

The service is slow at the Grand Café. The food is good but it takes a long time to arrive. It’s not their fault; the local economy is slow, and if they employed more waiters, the revenue would not support their wages. Better a Grand Café where the service is slow than no Grand Café at all.




It doesn’t matter much anyway. We’re all retired and the delay gives us time to talk.


But a couple of weeks ago the conversation got more serious than was good for anybody.


At the previous Sunday’s potluck lunch I had involved myself in the political discourse. Jeff had said what fools the present (Democratic) government were and Walter had agreed with him.


I had somehow got round to saying that at least they had been elected by a genuine popular majority and hadn’t tried to overturn an election they had lost.


So now on Tuesday evening at the Grand Café I had been marked as politically suspect. Walter asked quite politely whether I might not be happier back in Europe where governments had a more socialist predisposition. -What he was actually saying was that I was a damned communist and that if I didn’t like it here I should go back where I came from.


As the conversation progressed it became clear that adherence to the principle of unregulated capitalism was hard-wired into the collective consciousness in these parts. There was no point in my arguing. All I was doing was identifying myself as a traitor to the American way and engendering a palpable and distressing sense of universal affront.


“Get real, Cedrick,” Jeff said. “You know trickle-down prosperity works. When I came down here from Nebraska and opened the RV park it gave work to all sorts of local people who would have been unemployed without it. Surely you’re not going to deny that.”


Jeff is as decent, honest, and generous as anyone I’ve ever met, and there was no denying that his contribution to the local economy had been unreservedly positive.


Certainly at a local level trickle-down prosperity had triumphed with Jeff in the driving seat, but that does not jibe with how unregulated capitalism behaves at a national level.


The overall effect of unchecked monetarism is that money migrates from the middle class to a progressively shrinking oligarchical elite. This is demonstrated by the fact that in 1970 the difference in remuneration for a starting base level employee and for his CEO could be represented by a mutiple of 25:1. So let’s say the starting salary for a baseline employee in 1970 might have been $10,000 pa. His CEO at that time would have been earning about $250,000 pa.


Now the salary for a starting baseline employee is about $25,000 pa. The average annual salary for a Fortune 500 company CEO is now about $16,000,000. So since 1970 the differential ratio between the two salaries has gone from 25:1 to 640:1. Wherever the prosperity has been going it hasn’t been trickling downwards; quite the opposite. Wealth inequality has never been more pronounced in the USA than it is today.


This process is self-reinforcing and self-perpetuating. As the oligarchical elite garners a progressively greater share of the available wealth, it uses that wealth to introduce initiatives to make its political and economic gains irreversible. It also controls the national narrative on what is acceptable. If you are rich you control the entertainment media; that allows you to paint the rosiest picture of yourself imaginable. You promote the narrative that you are rich because you are conscientious, and that anyone who isn’t rich isn’t putting in the same level of effort.


There is a convenient built-in mythology in the United States which lends unassailable justification to laisser-faire capitalism. After World War II, the USA was able to demonstrate that capitalism was producing more wealth than communism, which was shown to be an oppressive, inefficient, wealth-destroying mistake.


This situation afforded influential opinion the opportunity to equate unregulated capitalism with freedom and prosperity, and to condemn any attempt at intervention in the activity of the so-called free market as communist and oppressive.


This credo, despite being an oversimplification of the economic forces operating at the time it was created, allows the furtherance of a process that funnels wealth and influence ever upwards into the hands of a smaller and smaller elite without the need for guilt or moderation.


Jeff’s wife is not your typical self-effacing homemaker who peeps out nervously from behind the broad protective shoulders of her husband. She is bright; I’m talking about a 150+ IQ here, and she is quietly and sweetly intellectually incisive.


She said: “Did you know that a hospital in Yuma recently went bankrupt from supplying free healthcare to illegal immigrants, because of Obamacare?”


Yeah, publicly funded healthcare. That is another taboo suggestion among the no-free-rides advocates.


Let’s address the bankrupt hospital in Yuma question first.


As I said at the time, I don’t think Obamacare is free, and I would also not take it on faith that Obamacare is available to illegal immigrants. I’m pretty sure that to obtain treatment under the Affordable Care Act you have to enroll in a plan, and that to do that you have to have a social security number.


I think it far more likely that the illegal immigrants may have bankrupted the hospital in Yuma using a completely different method. The method I am talking about is that of using the hospital’s ER as their primary care physician and then defaulting on the bills. It was this behavior that Obamacare was introduced to prevent.


If you are a seasonal agricultural worker you have no credit rating to protect and no income tax refund to lose; so, the payment of ER bills is pretty hard to enforce where illegal immigrants are concerned.


At the time of Dwight Eisenhower’s presidency two important sociological factors were very different from the way they are today.


The first thing that was different was that medical treatment was more primitive and a lot less expensive. That’s why the corporations happily undertook to provide healthcare for their employees rather than support a public healthcare option. Now healthcare is a hi-tech industry with massively expensive treatment options and the corporations’ coverage is grudging and barely adequate. High deductibles and pre-existing condition exemptions are now the order of the day.


The other thing that was different under Eisenhower was that the marginal tax rate for income in excess of $200,000 pa. was 90%. Now the highest marginal tax rate is 37%. You could be on $1M+; still 37%. This difference is the result of successive tax breaks for the wealthy granted by Republican presidents (Reagan, Bush 43, Trump) in the hope that the additional spare change would stimulate investment in jobs (which incidentally didn’t happen). So all those tax breaks did was add to the deficit while the rich got richer and the poor didn’t.


The Jesus factor about healthcare costs is that usually everybody doesn’t need expensive treatment all the time. Open heart surgery and hip replacements are once-in-a-lifetime events. So an organization with deep pockets, like the federal government, can cover these bills more painlessly than a corporation or an individual family, and without incurring too severe a deficit, especially if healthcare is factored into income tax. This is the argument in favor of expanding Medicare to cover the entire population.


In the event that publicly funded healthcare did prove prohibitively expensive, a higher marginal tax rate could be levied on incomes over $500,000 pa. (Dwight Eisenhower did it, and he was a Republican, remember). Elizabeth Warren’s wealth tax on multi-millionaires and billionaires would also help to moderate the shortfall.


(Actually a small increase in the national deficit would not be the end of the world, according to Stephanie Kelton’s book about Modern Monetary Theory. As long as foreign confidence in the dollar is maintained, a little extra expenditure to cover beneficial social programs would do very little harm. The US dollar is a fiat currency and is not tied hand and foot to any absolute standard like gold).


If you removed the burden of expensive healthcare from middle class households, they would have more money to spend on luxuries. It is the widespread expenditure from the middle class that stimulates the economy, not the occasional purchase of a Porsche by Warren Buffett. After all he can only drive them one at a time and there is only one of him.


Removing anxiety about healthcare from entrepreneurs would also make it easier for them to quit their salaried positions and introduce new technology.


74 views

Recent Posts

See All

Comments


bottom of page