How, in a democracy supposedly based on one person one vote, could the 1 percent could have been so victorious in shaping policies in its interests? It is part of a process of disempowerment, disillusionment, and disenfranchisement that produces low voter turnout, a system in which electoral success requires heavy investments, and in which those with money have made political investments that have reaped large rewards — often greater than the returns they have reaped on their other investments.
An elusive being has haunted Washington for decades now. Part gimmick and part punctuation mark, this mysterious creature has consistently baffled researchers and budget wonks who have sought to penetrate the fields of distortion it seems to create around the federal budget.
It was first spotted in a proposal President Reagan’s budget director David Stockman submitted to Congress more than 30 years ago. On Tuesday, Rep. Steny Hoyer (D-Md.), the minority whip, warned that its baleful influence could be felt in a budget proposal released by his Republican colleagues.
“They have a magic asterisk,” Hoyer said.
LAST year nearly 1m Americans filed for bankruptcy. That is far fewer than the number who used to seek bankruptcy protection before the law was made tougher a decade ago (see chart). This reform may have done more harm than good.
The aim of bankruptcy law is to give people relief from unpayable debts. Some two-thirds of individual bankruptcies are due to a lost job. Many bankrupts need time to get back on their feet. In the mid-2000s Chapter 7 rules made it easy to wash away debts. That irritated credit-card firms, which claimed that spendthrifts abused the system; so in 2005 the law was toughened. The idea was to shift people to a Chapter 13 bankruptcy, where they would have to repay some of the debt.
Since the end of the Great Recession in 2009, economic commentators have repeatedly noticed that the investment is too damn low. That is to say, corporations used to direct quite a lot of their surplus money towards upgrading their equipment and giving their workers raises, but they aren’t doing it as much anymore. In 2008, gross private investment plunged to levels not seen in more than 60 years, and has only just now begun to bounce back.
Economist Noah Smith suggests that while this is lamentable in many ways, there is simply no going back to what he calls the “corporate welfare state” of the 1950s and ’60s, when shareholders had little influence over firms and corporate investment was much higher. Drawing on his experience in Japan, which has a notoriously sclerotic corporate structure, he suggests that trying to wind back the clock won’t help:
Transcript of David Stockman’s Interview By Chris Martenson at Peak Prosperity
Chris Martenson: Welcome to this Peak Prosperity podcast. I am your host, Chris Martenson. It’s a central banker world and that world is increasingly volatile, deformed, and full of risks. Today, we’re speaking with a guest I am especially keen to interview, Mr. David Stockman, economic policymaker, politician, and financier. Mr. Stockman represented Southern Michigan in the US House of Representatives from 1976 to 1981 and later served as the Director of the Office of Management and Budget in the Reagan administration and was the youngest cabinet member of the twentieth century.
Since then, he has held executive positions in many of the most influential banking, buy-out, and private equity firms including the Blackstone Group and Salomon Brothers. He is author of The Great Deformation: The Corruption of Capitalism in America, which is a blunt and sometimes delightfully and deservedly scathing examination of the various fiscal and policy blunders that have degraded our current and future hopes for prosperity. Be sure to have your blood pressure medication handy as you read it because not only does it detail a litany of regulatory and policy blunders of the recent past, it reads like it was lifted from today’s headlines.
He also runs the popular and excellent website, David Stockman’s Contra Corner, where he both blogs and assembles other excellent economic content for you to read, so be sure to visit it regularly.
Welcome, David. It’s an honor to have you as our guest.
David Stockman: Very happy to be with you again, Chris.
My recent column about the growth of on-demand jobs like Uber making life less predictable and secure for workers unleashed a small barrage of criticism from some who contend that workers get what they’re worth in the market.
A Forbes Magazine contributor, for example, writes that jobs exist only “when both employer and employee are happy with the deal being made.” So if the new jobs are low-paying and irregular, too bad.