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May 21, 2014

During the interlude of perhaps 35 years between the New Deal and 1974, and due almost entirely to intervention by government which appropriated from its own coffers to make investments in our people by substituting public funds for those of private enterprise (since the wealth of the upper class and private enterprise took a hit because of the Great Depression and WW II), the social immobility of the ages was temporarily loosened as capital shared the fruits of our economy with labor. Forward looking statutes such as the GI Bill (education) and FHA (home financing) and other such legislation made for a booming economy and nearly full employment at good wages. Government was investing money in people rather than tax loopholes and subsidies for a particular class – the superrich. Revenues to government were booming along with the economy, thus further facilitating the financing of new and yet better programs of investment in its people. Republicans who were building interstate highways sounded like the liberals of today; it was sometimes hard to tell Democrats from Republicans as Ike warned us to beware the “military-industrial complex,” good advice which we have not taken.
Result? Coal miners’ sons such as I became lawyers. My now deceased wife, daughter of an iron worker, attained a doctorate in education and spent the largest part of her professional life as a university professor. Among my children and children of my immediate relatives are three M.D.s, university professors, an award-winning author and a number of other success stories ranging from the head of a university library to a drug researcher in the nation’s capital. All are bright, productive, and are not working second shift at the 7-11 as a direct result of such investment by government in their parents’ futures. They (and I) moved up, thanks to public investment in people.
I can accordingly testify from personal experience that policies of investment in people will reduce inequality between the classes. Conversely, I can testify from personal experience that investment in tax loopholes and subsidies for the superrich will entrench social immobility. There is only so much money to go around, and when the politically potent superrich hog the new wealth created by the economy (starting circa 1974) and write our tax and bankruptcy laws in such a fashion as to immunize themselves from payment of reasonable taxes with austerity economics and tax favors rather than investment in people as a backdrop, increased social immobility is assured. As I often note, how many budding Einsteins are there on second shift at the 7-11? With our present policies dictated by greed and not investment in people, we will never know. Such people are not the only losers; we all lose what they may have contributed to the common weal. We have investments in one another.
As an example of what we may have lost, Sir Alexander Fleming, discoverer of penicillin which with its offspring has saved billions of lives, was the son of a bankrupt Scottish farmer who (fortuitously) pulled an eight-year old Winston Churchill out of a peat bog in its quicksand phase near the Churchills’ summer estate in Scotland, earning him a college education from a grateful Randolph Churchill, father of Winston. What would we have lost but for this investment in Fleming’s education? He was going nowhere due to the social immobility and class distinction of the time and was destined to be a poor Scottish farmer, like his father. He saved more than Winston Churchill’s life; he changed history and saved billions of lives. He was not a loser to social immobility and the world is a huge winner as a result.
Harold Meyerson in the March-April 2014 of The American Prospect zeros in on the causes of wage inequality and its partner in poverty, social immobility: “What corporate apologists won’t acknowledge is that worker’s incomes have been reduced by design. American business has adamantly opposed workers’ efforts to organize unions. Millions of jobs have been outsourced, offshored, franchised out, reclassified as temporary or part-time, or had their wages slashed, in a successful, decades-long campaign to increase the return to capital. Indeed, the only way to explain the soaring profit margins and stock values of recent years despite anemic increases in corporate revenues is that profits have come at the expense of labor. The chief economist for Goldman Sachs, Jan Hatzius, in forecasting the continued rise of profits in 2014, recently wrote: ‘The key reason is the continued slack in the U.S. labor market and the resulting weakness of nominal wage growth. . . The subdued growth of unit labor costs has supported profit margins even in an environment of low price inflation.’”
The foregoing tells the story in a nutshell. Goldman Sachs admits that high profit margins are assured because of what is essentially corporate bullying of labor costs, consequent wage inequality breeds social immobility, social immobility rules out finding another Fleming, and we all suffer.
Are we willing to continue favoring outsized profits to a narrow slice of America over (literally) the possibility of a cure for cancer by a Scottish farmer or an individual currently employed by 7-11 and working second shift? I hope not – but under present policies, we will never know. We are losing more than money; we are losing our future. What are we going to do about it? GERALD E

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