[imgcontainer left] [img:ThurmanArnold.jpeg] Thurman Arnold wrote that in America “We were slow to learn after 1929 that great corporate organizations cannot continue to take money out of local communities without somebody putting it back.” It’s a lesson this lawyer from the 1930s New Deal could teach Congress and the President today. [/imgcontainer]
President Obama recently toured the rural Midwest asking people, “What can we do to jumpstart the economy?”
Mr. President, to fix the rural economy, one must first fix America. Congress, listen up. Our political economy is broken.
We have allowed America and the American Dream to be squandered, quietly stolen, hijacked and otherwise taken over by giant transnational corporations and the wealthy. The United States is no longer a representative democracy, but a political economy dominated by the few. This is what must be “fixed” before we can have meaningful discussion about specific policy needs for rural America.
We live in a liar’s economy. The financial crisis of 2008 was caused in part by liar’s loans, and removal of regulations that grew out economic turmoil of the 1930s Great Depression. But the situation now is far worse than the crisis of 2008.
Much of the political rhetoric about economic policy is dominated by fabricated statements having little or no basis in fact or sound economic policy. Politicians’ claims that their policy proposal will cure America’s ills are mere figments of their imaginations, or wishful thinking, or sound bites scripted by corporate lobbyists.
Debt Isn’t the Main Issue
Let’s get something straight: The federal debt is not the main issue, in my opinion, despite the incessant outcry and political posturing over it.
The bigger problem is that we have allowed for America and the American Dream to be squandered and quietly stolen, taken over by giant transnational corporations and the wealthy, sometimes influenced more by foreigners than by our citizens, rural and urban.
While most Americans, particularly rural citizens, have lost jobs, income, and security over the last several years, corporate profits have more than doubled, increasing from $765 billion in 2002 to $1,819 billion in 2010. Profits continue to rise in 2011. Corporate executives and major stockholders are doing quite well, while most Americans face declining wages, higher unemployment, and considerable uncertainty about their families’ futures.
The chart below shows the slice of the domestic pie (value added) captured as corporate profits.
Tax rates for the wealthy have been cut in half in the past 30 years. The gap between the rich and the poor is growing and middle class America is declining. We are becoming a society of three classes: the poor, the working poor and the wealthy.
Rural areas are affected in two ways by the rapid growth of corporate economic and political power. First, corporate power squeezes the profits out of many businesses and squeezes wages and benefits of hard working Americans. Second, rural citizens have essentially no voice in Washington. For that matter, few citizens, rural, urban or suburban, have much say in Washington.
Corporate Economic Power
The 1890 Sherman Act and the 1914 Clayton Act were intended to prevent businesses from achieving excessive power as they had during the “robber baron” era of the late 1800s. Unfortunately, these antitrust laws have been weakened or ignored in the past three decades.
Thurman Arnold, a Yale University law professor and head of President Franklin Roosevelt’s antitrust division at the Department of Justice, in a historical assessment of the first Depression said:
“The most significant evil at which the antitrust laws are aimed is the evil of absentee ownership and industrial concentration that makes for such depressions. We were slow to learn after 1929 that great corporate organizations cannot continue to take money out of local communities without somebody putting it back.”
It’s 2011 and it is also deja vu! The rural economy will not improve as long as we keep taking money out of local communities. It doesn’t take a Ph.D. in economics to know that!
The need to rediscover the purposes for antitrust laws and assure their enforcement has never been more acute than now.
Corporate Political Power
The present American political economy has been referred to as a corporatocracy, plutocracy, oligarchy, and even fascism, the integration of business and government. Whatever, the United States is most definitely NOT a representative democracy.
Corporate political contributions and lobbying, not average citizens, drive politics in Washington. Traceable contributions are approaching $10 billion annually, much coming from big business and the wealthy. (For details, go here.) Rest assured that big business does not make these huge contributions out of the goodness of their corporate hearts. They make the contributions because they expect to receive more in benefits than the cost. And they have.
Using the $10 billion a year to pay down the federal debt would benefit Americans doubly: debt reduction and some hope of returning to a representative democracy. How’s that for a plan?
The corporatocracy had its beginnings in an 1886 Supreme Court case Santa Clara County v. Southern Pacific Railroad. The Court opined that corporations were to be recognized as persons. A corporation is not a person. A person is a person.
Corporate stranglehold on our government was tightened substantially two years ago when the Supreme Court ruled 5-4, in Citizens United v. Federal Election Commission, reversing the nation’s campaign finance laws. Now corporations can spend unlimited amounts on political campaigns, under the guise of free speech, the First Amendment. This just doesn’t make any sense to an old country boy; corporate executives get to speak through the corporation, and also get to speak as real citizens. Isn’t this 2 votes (or many more) for some individuals?
Corporate political contributions flow in for rural political candidates from urban areas, from corporations out of state, and even from foreign corporations. Somebody in another country may have more say in your rural affairs than you do. This just ain’t right!
Thom Hartman maintained that Congress should take back power the court has usurped. He wrote, “Please read the Constitution. Nowhere in it does it say that the Supreme Court can strike down laws passed by Congress and signed by the President. Nowhere.” But they did.
Follow the money. Follow the money to your so-called representative.
Follow the money and you will find out what threatens the very soul of the American Dream.
Fixing all that ails rural America begins with restoring the American Dream of a representative democracy combined with a capitalist system to benefit the many rather than the few.
C. Robert Taylor is a professor of Agricultural Economics at Auburn University.