A Blueprint for 21st Century Populism

I have just finished reading "America Beyond Capitalism: Reclaiming Our Wealth, Our Liberty and Our Democracy" by Gar Alperovitz. Don't let the title scare you. Anyone looking for a Marxist diatribe about the inherent evils of market economies will be disappointed by this book recently released in paperback by Wiley Publishers. Instead you will find a thoughtful book that presents realistic ideas about how prosperity can be expanded in our nation. "America Beyond Capitalism" is a good starting point for developing a "21st Century Populism" to effectively address growing economic inequalities and gain control over the rapidly expanding power of big business.

Alperovitz is a man of the Left on economic and social matters but he pulls ideas from across the ideological spectrum about how the American standard of living can be improved. The author pulls no punches in pointing out how tax cuts for the wealthy, deregulation, the weakening of collective bargaining protections and globalization have brought about economic stagnation for many workers, but looks for solutions rather just dwelling on the injustices resulting from these laissez faire policies.

Taking a realistic approach, Alperovitz expresses doubt that organized labor can regain its former political strength as a balance to corporate power and notes the virtual poltical impossibility of raising taxes on upper middle class suburbanites. Any successful attempt at rolling back tax cuts is likely to be directed at the upper one to five percent of the population. The dramatic growth of corporate power is illustrated by the fact that corporate taxes accounted for 35.4 percent of all federal tax receipts in 1945 and had fallen to 7.4 percent of federal receipts by 2003.

In his book, Alperovitz suggests that means of generating public revenue other than through redstribution of income need to be explored. One suggestion is to create a Public Trust which would oversee the investment of stock in the same manner as state and local public pension authorities. The proceeds from the Public Trust could flow to the federal treasury, states and even individuals. Alperovitz proposes a "Pluralistic Commonwealth" to create "new public and semi-public wealth building institutions" expanding prosperity and which "structrually tethers large scale firms at the top by lodging stock ownership in the Public Trust accountable to and open to scrutiny by the public."

Another big idea presented in the book is a system of Individual Development Accounts (IDA's). The IDA's would enable government to "directly match the savings of the poor - thus doubling their efforts and allowing low income individuals to benefit from the ownership of capital." Alperovitz describes a proposal by Yale economist John Roemer to provide every adult with "voucher-like coupons" to be used for the purchase of stock through a "new form of mutual fund."

Alperovitz makes a very insightful observation on page 73 of his book, "Neither tradional socialism nor traditional capitalism deals well with the power problems presented by large-scale enterprise. Significant economic actors in the socialist state are commonly unaccountable either to market forces or to the public, they are power systems within a power system. The modern for-profit corporation is for the most part unaccountable to the public - and contrary to traditonal theory, in most cases unaccountable to shareholders as well. As the Enron and other scandals have shown managers and top executives run the system dominating boards and annual meetings alike. Rarely are successful challenges to their power successful, even by major shareholders."

Increased tax incentives to encourage the formation of more employee owned corporations is one way that American prosperity can be expanded. Alperovitz notes that pay in employee owned firms is 12 percent higher than in non-employee owned companies. Employees of such firms earn far more value in stocks than workers with 401(k) plans which some bitterly joke that given dismal performance have become 201(k) and 101(k) plans.

Alperovitz praises neighborhood community development organizations (CDC's) for their social service projects and business development functions within economically deprived areas. CDC's are under local community control and would play a critical role in service delivery and economic development in the "Pluralistic Commonwealth." The emphasis on such social entrepreneurship has already been embraced by some American conservatives as well as even some European social democrats. In fact, some European social democracies long used voluntary organizations for service delivery rather than expanding government. Anthony Giddens, writing in "The Third Way: The Renewal of Social Democracy" (Polity 1998) indicated that in Germany, Holland, Belgium and Austria about half the social services are provided by private groups. Certain functions like operating day care centers are almost universally left in the hands of private non-profit organizations.

Reinventing government would also be a focus of the "Pluralistic Commonwealth." Alpervoitz observes the "threat of privatization" can sometimes to improve government performance. The author tells of the experience of former Republican Indianapolis Mayor Stephen Goldsmith who won election on a platform of vigorous privatization of public services. After winning election, Alperovitz writes: "Goldstein became convinced that 'competition' - not privatization per se provided the key to improving city services and reducing costs. Public employees were allowed to bid on city contracts, and to redesign their offices and operations in the process. Public employees won the majority of the contracts put out to bid, with estimated savings of $135 million in the program's first three years." Alpervovitz notes that city owned power companies in several major cities provide electric service at a cost of 11 percent less than investor-owned power companies. A municipally owned utility in Glasgow,KY offers high speed internet access for less than private competitors and Cable TV service with 80 digital channels for $15.95 per month.

Alperovitz describes the coming insolvency of our Social Security system but notes that a collapse is not inevitable. The author presents several possible solutions to the crisis which include raising the earnings limit, a 1 percent net worth tax and allocating a portion of Social Security contributions to an equity-invested fund that would operate in a similar fashion to the Federal Thrift Savings Plan.

Health care reform is likely to become viable again. While insurance companies were successful in blocking the last serious attempt to expand access to health care for all Americans, public opinion supports such a change and many corporations now favor some form of national health insurance.

Displaying something of a libertarian streak, Alperovitz suggests the potential for greater automony at the state level and the possible transfer of many powers of the federal government to the states or some form of regional government structures. Some of this appears rather unrealistic at the present time but may come into existence in the future especially given the growing cultural and ethnic divisions in our nation. The author points out that large states like California, Texas and California are increasingly diverse and have much larger populations and economies than many nations.

At times, "America Beyond Capitalism" seems like a confused jumble of sometimes conflicting ideas about how properity and personal liberty can be expanded in America, but Alperovitz at least does present a number of creative solutions for the growing income inequality in our nation.

I disagree with Alperovitz's positions on some matters such as the likely impact of illegal immigration in the U.S. The right kind of immigration could help to solve the Social Security shortfall, however, massive numbers of unskilled newcomers are likley to make our economic and social problems worse. Like many progressives, Alperovitz is convinced that a large influx of poor and low skilled individuals from south of the border will create a political environment more inclined toward activist government and challenging corporate power. This seems unlikely as a larger class of impoverished Americans will make social programs more expensive and therefore less likely to be supported by the surburban upper middle class fearful of tax increases and certainly the influential wealthy. Furthermore, many of these new immigrants may not be inclined to vote or end up voting against their economic interests just as significant numbers of working class and native born Americans do.

"America Beyond Capitalism" is well worth reading. The book presents ideas that will be of interest to a wide range of Democrats. There are some excellent ideas presented that populists, progressive, centrist-New Democrat and and libertarian Democrats can agree on.

http://tinyurl.com/o3ab3